A brand new easy access account has just launched. Savers would be mad to miss it!
Since the summer, the Post Office has been looking to stake its claim in the savings market with the launch of five new savings accounts. Savers now have a choice of easy access accounts, fixed rate bonds and cash ISAs.
I can’t say all Post Office products are market leaders, but the account which has really caught my eye is the newly re-launched Post Office Online Saver. If you’re looking for a simple saver with easy online access, this would be a great place to start.
But how does the Post Office Online Saver compare with other accounts that already available on the market? The table below will reveal all:
Top five easy access savings accounts
|
Account |
% AER |
Bonus included in the rate |
Minimum deposit |
Access |
|
2.90% |
1.25% for 12 months |
£1 |
Online |
|
|
2.80% |
2.30% for 12 months |
£1 |
Online |
|
|
2.75% |
2.25% for 12 months |
£1 |
Online |
|
|
2.63% |
1.10% for 12 months |
£1,000 |
Online |
|
|
2.60% |
No bonus |
£1 |
Online |
You can clearly see the Post Office’s new account has gone straight into the number one slot with a top rate of 2.90%. This return leaves the other best buys trailing in its wake with the next account in the table - the AA Internet Extra Issue 3 - only offering 2.80%. The previous issue of the Post Office Online Saver offered a rate of 2.75% which, while still competitive, has been improved upon significantly this time round.
In today's video, I'm going to highlight five things you should consider when choosing a savings account.
The introductory bonus
A guaranteed bonus of 1.25% is also available for the first 12 months from the date the account is opened. These days, most of the best buys offer an introductory bonus, but this is where the Post Office account falls down a little.
The 1.25% fixed bonus is actually pretty small compared with some of the other best buy accounts. It does guarantee savers a minimum return, but given that the underlying rate of 1.65% is variable and could be cut at any time, I doubt savers would be satisfied with earning just 1.25% on their cash until the bonus disappears in a year’s time.
Meanwhile, the AA Internet Extra Issue 3 provides a fixed bonus of 2.30% for the next year, which means savers are guaranteed a far more generous minimum return than the Post Office can manage, even though the 2.80% headline rate is lower.
True easy access 24/7
On the plus side, true easy access is also on offer with no penalties when you make a withdrawal. What’s more, there’s no limit on the number of withdrawals you can make or the amount you can take out.
Recent question on this topic
- tariq300 asks:
I got £300000 and no job,i need a saving a/c which pays monthly interest on my saving,wht do you reccomend pls,thks
- JoeEasedale answered "You certainly do not need A savings account. Put £300000 in one savings account and if that..."
- MikeGG1 answered "You need to split the money between institutions for safety as Joe says. Your idea of monthly..."
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On top of that, the account is suitable for all types of savers. Smaller savers can open the account with a minimum deposit of just £1. But it’s also a great choice for those of you with considerably more to put away. (The maximum deposit is £2 million.)
If you’re looking for an instant access online account with a top rate and no hidden catches, the Post Office should be right up your street. You can apply quickly and easily at Post Office Online Saver.
Post Office bonds
In addition to the market-leading easy access account, the Post Office has also re-launched the one-year fixed rate bond. Bonds are a good choice for savers who are happy to lock their cash away temporarily. In return, you’ll earn a slightly higher rate than you would get from an account that offers instant access.
So, how does the Post Office Online Bond Issue 2 compare with other one-year bonds? Let’s find out:
Top five one-year bonds
|
Account |
% AER |
Term |
Minimum deposit |
Access |
|
3.05% |
To 31.12.11 |
£100 |
Online |
|
|
3% |
To 20/10/11 |
£1 |
Online |
|
|
3% |
1 year |
£500 |
Online |
|
|
3% |
To 29/11/11 |
£50,000** |
Branch |
|
|
2% |
1 year |
£2,000 |
Phone |
*Only available to NatWest current account or instant access savings account holders. **Balances over £5,000 earn 2.50%. Balances over £25,000 earn 2.75%.
This time the Post Office Online Bond Issue 2 hasn’t quite reached the top of the best buy table, but it certainly offers a competitive rate of 3% on savings of £500 plus. Don’t forget, once you have opened the bond you won’t be able to make additional deposits or withdrawals.
That said, if you change your mind, the bond can be closed early subject to a breakage fee. This penalty is equivalent to 90 day's loss of interest, which means losing a quarter of the total return. You should only take out the bond if you're confident you won't need your money back before it matures.
For savers who only have a relatively small amount to put away, the Barnsley BS 1 Year Fixed Rate Online Bond with a minimum deposit of £100, and the Northern Rock E Bond Issue 1 with a minimum deposit of £1 will be more suitable. And, of course, you’ll get an extra 0.05% with the Barnsley Bond.
Compare savings accounts at lovemoney.com
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