With interest rates still sliding downwards on easy access accounts, what options do savers still have?
Savers are being hit from every angle at the moment. As if rising inflation and a rock bottom base rate wasn't enough, the latest attack has sent interest rates on easy access accounts plunging downwards.
Getting instant access to your money, while earning interest on it, is a good option as you’re not locking it away but you’re still earning more than if you were to keep it in your current account.
Falling interest rates
However, the rates have been slowly creeping downwards. The average rate for a standard easy access account is now is 1.05%, a fall from 1.09% a month ago, according to Moneyfacts.co.uk.
Several providers - including ING Direct, Nationwide Building Society, Santander, Derbyshire Building Society and Post Office - have recently withdrawn easy access accounts and launched new issues, with lower rates.
Interest rate changes in the last month
|
Account * |
Interest rate in August 2012 |
Interest rate in September 2012 |
Difference |
|
3.20% |
2.80% |
-0.40% |
|
|
3.06% |
2.80% |
-0.26% |
|
|
3.00% |
2.80% |
-0.20% |
|
|
3.06% |
2.90% |
-0.16% |
|
|
3.02% |
2.86% |
-0.16% |
|
|
3.05% |
2.90% |
-0.15% |
|
|
3.01% |
2.95% |
-0.06% |
*source: Moneyfacts.co.uk
So what is on offer in the instant access market?
Despite the recent downward spiral, you’ve still got quite a lot of choice when it comes to savings accounts, although the rates on offer are pretty pitiful.
As you have unlimited deposits and withdrawals from these accounts, the interest is lower than you would get from an account with a longer term.
A one-year fixed rate account or a notice account would both give you more interest, but there are restrictions on the number of withdrawals and deposits.
The best accounts with a bonus
[SPOTLIGHT]Top of the table for instant access accounts with a bonus is the West Brom which pays 3.06%, with a bonus of 1.54%. However, this also has a minimum opening deposit of £10,000 which is quite a large amount to keep in an instant access account.
Next after the West Brom comes Post Office with a 2.95% account (and 1.30% bonus) which you can open with £1, which means it will likely suit more people.
With bonus-paying accounts, remember to keep an eye on when the bonus ends and be prepared to switch your money over at this point to an account with a higher rate of interest.
Top five instant-access accounts with a bonus
|
Provider |
Rate |
Minimum deposit |
Access |
Bonus |
|
The West Brom direct Bonus Account 5 |
3.06% |
£10,000 |
Phone and post |
1.54% until 30 September 2013 |
|
Post Office Online Saver |
2.95% |
£1 |
Online |
1.30% for the first 12 months |
|
2.90% |
£1,000 |
Online |
1.90% until 31 January 2014 |
|
|
2.90% |
£1 |
Online and phone |
2.45% for the first 12 months |
|
|
2.90% |
£1,000 |
Online |
1.36% for the first 12 months |
The best accounts with no bonus
If you want a decent account which you’re not going to have to monitor every year, go for one without a bonus. The rates aren’t as good but you’ll have the peace of mind of getting a regular interest rate which isn’t going to change.
Again in this table the top two accounts paying 2.80% ask for a whopping great sum of £25,000 to open the account. If you haven’t got this kind of money, or aren’t happy keeping it in an account like this, go for something like the Aldermore account paying 2.75% or that from Virgin which pays 2.60% but only asks for £1 when you open it.
Top five instant-access accounts with no bonus
|
Account |
Rate |
Minimum deposit |
Access |
|
Shepshed BS Postal Account |
2.80% |
£25,000 |
Postal |
|
Teachers BS Smart Saver |
2.80% |
£25,000 |
Postal |
|
Aldermore Easy Access Issue 2 |
2.75% |
£1,000 |
Online, post, phone |
|
Leeds BS Postal Account Issue 2 |
2.75% |
£1,000 |
Online, post |
|
2.60% |
£1 |
Online, branch, post, phone |
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