Szu Ping Chan looks at a little known savings account that could be very good for your cash.
This article was first sent to Fools as par of our Good, Bad and Ugly email campaign.
When it comes to choosing a savings account, many of us pore over best buy tables to find out what the top deals are. Here at The Fool, we always keep a close eye on them, and over the years we've highlighted the benefits of several accounts which have topped these lists.
Kaupthing Edge has topped the best buy tables for much of this year since launching in February - going from virtually unknown to one of the most popular accounts on our site. The account currently pays a great rate of 6.55% with no catches, and guarantees that this rate will be at least 0.3% above the Bank of England Base Rate until February 2012.
However, not one to follow the crowd, when it comes to instant access savings, my personal favourite is one many may not have heard of: The Anglo Irish Bank Easy Access Deposit Issue 2. The name doesn't exactly roll off the tongue, but I'm going to tell you why it's one of my top picks.
Firstly, let's put things into perspective. Here's how the Anglo Irish Bank account sizes up against the top players in the market at the moment:
Provider and Account | Interest Rate (AER) | Minimum Balance | Ways To Operate Account | Notes |
|---|---|---|---|---|
(1st place) | 6.56% | £1 | Internet | 0.94% bonus until 7th December 2009. No interest in any month when a withdrawal is made, except July. |
Kaupthing Edge Instant Access Savings Account (2nd place) | 6.55% | £100 | Internet/ Phone | Guaranteed to be 0.3% above the Bank of England base rate until 1st Feb 2012 |
Anglo Irish Bank Easy Access Deposit Issue 2 (23rd place) | 6.4% | £1 | Phone/ Post | Guaranteed to equal the Bank of England base rate until 1st Jan 2011. |
Source: eMoneyfacts
According to eMoneyfacts, despite paying a respectable interest rate of 6.4% on balances from £1 -, the account languishes well behind its rivals, coming in at 23rd place in terms of the interest rate it pays.
You may also notice that despite the Alliance and Leicester eSaver topping the table, I have failed to mention it until now. This is because the account comes with two catches - a 0.94% bonus, which expires next December, and a withdrawal penalty of zero interest for any month you take money out - except July.
In fact, as I explained in Don't Get Caught In This Savings Trap, many accounts have tricks up their sleeves such as introductory bonuses to get them into the best buy tables, but quickly lag behind when these bonuses expire. For this reason, I think the Kaupthing Edge and Anglo Irish accounts are both better than the Alliance and Leicester eSaver, as they are all completely catch-free.
More than just numbers
However, for me, the key feature of the Anglo Irish account kicks in whenever you need to make a withdrawal. Provided your request is made by 2pm on a working day, Anglo Irish will transfer the funds into your account via a CHAPS (same day) transfer at no extra charge - guaranteeing your money will reach your nominated account on the same day.
This is a crucial benefit if you're someone who needs quick access to your money - for example, if you are saving for your first house deposit, and need to put your money where your mouth is quickly when closing the deal on a new home.
But how does Anglo Irish fare when it comes to the numbers? Well, if you had a balance of £1,000 in each account, you'd earn £65.50 gross interest with the Kaupthing Edge account, while Anglo Irish bank would pay you £64. The question you have to ask yourself is whether this £1.50 sacrifice a year in interest for every £1,000 in savings is worth the convenience of having quick access to your money?
Operating offline
One possible downside of the Anglo Irish account is that you cannot operate it online, so all transactions must be conducted via the telephone or by post - although you can transfer money into the account using your own internet banking service.
So, if you are looking for a savings account you can surf through the web waves, you may be better off opening an account with Kaupthing Edge, or one of the other providers which allow online operation.
However, as far as innovation and efficiency is concerned, Anglo Irish is definitely one of my top picks - and an alternative you may want to consider too.