As the top easy access savings account disappears, and rates across the board plunge, is there any point in an easy access account?
Blink and you miss it; a little over a week ago NatWest launched a market-leading easy access savings account paying 2.85%. Sadly this competitive rate was short-lived and has now been dropped, just over a week after launch, to a paltry 1.0%.
It wasn't alone, as other accounts at the top of the best buy tables a week ago have been cut or withdrawn.
The Derbyshire NetSave Issue 6 paying 2.75% has been replaced with Issue 7 which pays a much smaller 2.5%. The same reduction has been implemented by Nationwide Building Society with its My Save Online Plus. Skipton Building Society’s Online Bonus Saver that paid 2.60% has been withdrawn. And most recently the ING Direct Savings Account has taken another cut from 2.50% to just 2%.
The most recent changes have left savers with very little variety when it comes to easy access savings accounts.
Here’s a roundup of the only decent rates I could find out there at the moment.
Top instant access accounts available now
|
Account |
Interest Rate Gross AER |
Minimum deposit |
Withdrawal limits |
Access |
Bonus |
|
West Brom BS WeBSave Easy Access 5 |
2.52% |
£10,000 |
Four withdrawals allowed per year |
Online |
Rate includes a 1.0% bonus fixed until December 2013 |
|
2.50% |
£1 |
None |
Post or phone |
None |
|
|
Saffron BS E-Saver Issue 6 |
2.50% |
£10 |
None |
Online |
None |
|
2.50% |
£1,000 |
None |
Online |
Rate includes a 1.50% bonus fixed until February 2014 |
|
|
2.50% |
£1,000 |
One free withdrawal per year |
Online |
Rate includes a bonus of 0.97% fixed for 12 months
|
|
|
Tesco Internet Saver Account |
2.40% |
£1 |
None |
Online |
Rate includes a 1.15% bonus fixed for 12 months |
|
Post Office Online Saver |
2.35% |
£1 |
None |
Online |
Rate includes a 0.70% bonus fixed for 12 months |
|
Newcastle BS Sir Bobby Robson Foundation Saver Issue 2 |
2.35% |
£1 |
None |
Online |
None |
|
Principality e-Saver Issue 8 |
2.30% |
£1 |
None |
Online |
None |
|
2.25% |
£1,000 |
None |
Online, phone or post |
None |
West Bromwich Building Society’s WeBSave Easy Access 5 which pays 2.52% is the new table topper. But the headline rate is only available if you have £10,000 to open the account.
With research from HSBC recently revealing that eight million UK households have less than £250 put away, this particular account is not going to help the large number of savers with modest pots.
Allied Irish has the most reasonable proposition after West Brom with an account only needing a £1 deposit to get access to a rate of 2.50%. That said the rate can be found with a variety of banks and building societies at the moment so isn’t exactly special.
So where else can savers go?
Notice accounts
If you’re prepared to give up some access the rates do improve and they aren’t all in fixed rate bonds - notice accounts are looking very attractive at the moment. Here are five that look particularly juicy.
|
Account |
Interest Rate Gross AER |
Minimum deposit |
Notice |
Access |
Bonus |
|
Post Office Reward Saver |
3.00% |
£500 |
30 days |
Branch, post, phone |
Rate includes 1.25% bonus fixed for 12 months |
|
Hanley Economic BS Postal 180 Day Notice- Issue 2 |
2.75% |
£5,000 |
180 days |
Post |
None |
|
Aldermore 60 Day Notice Issue 2 |
2.70% |
£1,000 |
60 days |
Online, phone or post |
None |
|
Hinckley & Rugby BS 90 Day Notice Postal Account |
2.65% |
£2,500 |
90 days |
Post |
None |
|
Bath BS Direct 60 Issue 5 |
2.60% |
£2,500 |
60 days |
Post or online |
None |
Overall the rates on offer here are much better than what can be found with an easy access savings account at the moment. I like to think of notice accounts as the middle ground between easy access and fixed rate bonds - where you give up a little access and flexibility to get a better rate. Sometimes the rates between the two don't differ too much, but currently the better deals are plain to see.
The Post Office offers a cracking 3.0% for a reasonable £500 investment. What’s even better is that the notice period isn’t too long - all you need to provide is 30 days’ warning in order to get access to your cash.
This short timeframe isn't always the case though. Hanley Economic Building Society provides a good rate of 2.75%, but you have to give a whopping six months’ notice if you want to make a withdrawal. You’re able to access money without notice, but this incurs a penalty loss of 180 days' interest.
What about peer to peer?
You may have also heard of peer-to-peer savings. It’s a type of investment that cuts out the banks to get you access to higher rates by giving you the opportunity to lend your money directly to businesses or individuals needing a loan.
Usually peer-to-peer savings run across one- to five-year terms, but RateSetter has a monthly scheme, which offers a current market rate of 3.1% - including fees and bad debt.
You can start lending from as little as £10 and access the whole sum of your cash plus the interest at the end of the month or roll it over to keep it invested.
lovemoney.com editor John Fitzsimons is testing the monthly savings option out. Read: Why I've started saving with RateSetter to see how he gets on.
The wild card
One account that could leave you better off is Buckinghamshire Building Society’s Chiltern Gold Escalator which builds to a rate of 4.0% over a year providing an AER of 2.85% in the first year.
This account is not traditionally easy access, because if you touch the pot you have to start building the rate again. But you can if you need to with little penalty apart from a rate drop.
If you like the sound of it check out this story: Buckinghamshire launches savings accounts with rising interest rates.
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