With so many savings accounts on the market littered with restrictions and small print, we help you find that winning combination of a high interest rate without any penalties.
The Bank of England kept interest rates on hold this Thursday, leaving savers round the country breathing a sigh of relief.
However, many are still reeling from the aftermath of last month's cut, which is still having a knock-on effect.
According to Moneyfacts, 22 lenders have cut rates on some of their savings account by more than the quarter-point reduction set by the Bank of England. In some cases, savers have seen their interest rates slashed by 0.5%.
For example, customers holding an EasySaver account with Alliance and Leicester saw their interest rate cut from 3.56% to 3.10% -- not an impressive figure to begin with, but still a mighty 0.46% cut in rates.
The truth is, older savings accounts are usually hit hardest when it comes to interest-rate movements. Probably once advertised as a headline rate, they've now been left languishing in the dark, with banks craftily hoping you won't be Foolish enough to notice.
So, if one of your New Year resolutions was to save more, here are some of the best instant-access savings accounts currently on the market where you can stash your cash:
Top four catch-free easy-access accounts
Provider | Account | Interest Rate (AER) | Minimum Deposit | Conditions |
|---|---|---|---|---|
Firstsave | Easy Access | 6.5% | £100 | n/a |
Northern Rock | Tracker Online | 6.49% | £1 | Rate includes 1.24% bonus for 12 months |
HiSAVE Savings | 6.41% | £1 | Rate is guaranteed to be 0.30% above Bank of England base rate until 31 of December 2011. | |
Internet Saver (issue 2) | 6.4% | £1 | Interest guaranteed to at least match the Bank of England Base Rate until 1 July 2009. |
As you can see, despite the base rate dropping to 5.5% last month, it's still relatively easy to find a savings account paying over 6%.
These accounts are even good for people who are just starting to save, as the most you're expected to fork out is £100 to benefit from these great rates.
However, it's worth noting that some of these 'best buy' accounts have an expiry date. The Northern Rock account has a bonus of 1.24%, payable for twelve months from account opening. Also, any account without a guarantee could see the rate change for the worse at any time.
Of course, many of you might be wary of Northern Rock at this stage, but more mature Fools might benefit from Northern Rock's Silver Savings account. It has a rate of 6.5% with no penalties, and as there is no introductory bonus it means there's no short-lived boost. The account is operated online and you have to be over 50 to apply.
Firstsave's Easy Access account, ICICI's HiSAVE, and Bradford and Bingley's Internet Saver have no such restrictions.
Before you consider pouring your money into an instant access account, you should always ensure that you've topped up your ISA allowance -- currently £3,000 for the 2007/08 financial year, increasing to £3,600 from April.
Last of all, make sure you check out any account restrictions before being seduced by advertised interest rates, as you could be left with a lagging account only months after you've opened it.
Other than that, keep on filling those piggybanks!
Find a better home for your savings using our savings centre | Read: Five More Places To Put Your Savings and Earn Cashback On Everything!