It's been a pretty wet summer up to now, but if you want to set aside some rainy day savings there is plenty out there to brighten your day.
If you are looking to open a new savings account the good news is that you have picked a great time. The global liquidity squeeze has made it difficult for financial institutions to borrow money on the wholesale market to lend out to mortgage borrowers, so they need to get money from ordinary savers instead. That means there are lots of great accounts for you to choose from!
6.55% !
One instant access account that recently caught my eye is Derbyshire Building Society's Web Saver account which pays 6.55% interest. That's a cracking rate, but is it too good to be true?
That depends on what you want. The Web Saver includes a 1% bonus for the first year, meaning your rate will drop by 1% in year two. In fairness, this is common practice with lots of accounts, but watch out for if you don't want to be switching accounts every year.
The account has further restrictions. You have to put in a minimum balance of £1,000 by cheque and then any future deposits must be by standing order. (In other words, you can't just transfer from your current account as and when you have extra cash). Interest is paid annually not monthly and only four withdrawals are allowed each year. If you go over this the Derbyshire may convert your account to its iSaver, currently paying 5.3%.
If these conditions suit your needs, then the Derbyshire's Web Saver could be perfect, but there are more flexible deals available.
Alliance & Leicester's eSaver pays a competitive 6.5% and has fewer restrictions on paying money in. You can save from as little as £1 and put money in regularly, or as and when you want. Your interest can be paid into the same account or another, but be aware that the current rate does include a 0.88% first year bonus, so expect your rate to drop by that amount in year two.
Interest is paid monthly, but if you make a withdrawal in a particular month you'll receive no interest at all that month. So even if you put £1,000 in and take £10 out you'll get nothing for that month -- not great if you need regular access to your savings.
So what about instant access accounts that really allow you to get your money whenever you want and still pay the headline rate of interest? Here's my tips for the best of the bunch:
Kaupthing Edge has an account paying 6.5% with very flexible terms. You need to put in a minimum of £100 and then you can pay money in as and when you please. Interest is paid monthly and there is no notice period or penalties for withdrawals
Intelligent Finance offers 6.4% on a very flexible instant access account, plus the minimum deposit is only £1
But pipping both to the post is Bradford & Bingley's Internet Saver at 6.51%. It's extremely flexible with a £1 minimum deposit, no withdrawal penalties and a choice of monthly or annual interest.