Getting a good return means jumping through hoops.
Times are hard for savers. With the Bank of England base rate still at an all-time low, it’s difficult to get a worthwhile return on your money. So when you see a decent rate advertised it’s tempting to jump straight in.
But many of the top-paying savings accounts come with small print that may mean you have to jump through hoops to get the rate on offer. We’ve taken a look at some of the clauses to be aware of.
Withdrawal limits
It’s not just fixed rate accounts that offer savers limited access to their money – some “easy” or instant access accounts do too.
Take West Brom’s WeBSaveR Limited Access account, for example. It pays 1.4% AER but the clue’s in the name – you’re only allowed limited access to your account before the interest rate is slashed.
The 1.4% rate stands for up to three withdrawals a year but if you make a fourth it will be reduced to a paltry 0.75% for the rest of the “account year” (which ends on 30 April).
Britannia’s Select Access Saver 6 levies an even harsher penalty for too many withdrawals. It pays 1.4% AER if you make four withdrawals or less but take money out for the fifth time and the rate is cut to a hardly-worth-having 0.1%.
Compare easy access savings accounts with lovemoney.com
Introductory bonuses
Plenty of decent savings accounts only offer a decent rate for a set period of time, before the interest is drastically cut.
Tesco Bank’s Internet Saver pays 1.35% AER but only for 12 months. At that point the 0.6% bonus is cut, reducing the rate to just 0.75% AER.
BM Savings Online Extra Issue 12 works in a similar way. It pays 1.31% for 12 months then reduces the rate to just 0.5%.
The Post Office’s Online Saver issue 11 pays 1.3% for 12 months then knocks 0.4% off the rate, reducing it to 0.9% AER.
The best plan of action if you open an account with an introductory bonus is to make a note of when it ends and then move your money to a better account.
Compare savings accounts with lovemoney.com
Minimum deposits
Generally speaking if you want to get a decent interest rate you’ll need to tie your money up in a fixed rate bond – but you’ll need lots of money to get the best rates.
A quick look at the best buy tables show that some accounts require a hefty five-figure sum to open a fixed rate account.
Investec and the Bank of London & the Middle East both insist on a minimum deposit of £25,000 to open a two or three-year fixed rate bond.
Investec pays 2.65% on its three-year bond and BLME 2.5%. However both are beaten by Aldermore Bank which pays 2.7% and only requires a minimum investment of £1,000.
It’s not just fixed rate accounts that want a five-figure sum invested – some easy access accounts do too. TSB eSavings accounts advertises a rate of 1% – not particularly impressive and includes a 0.8% bonus for 12 months – but you need to stash away £10,000 to get this rate..
Regular savers tied to current accounts
First Direct offers an impressive 6% on its Regular Saver account in which you can save between £25 and £300 each month.
But you’ll need to open a First Direct 1st Account to be eligible. This could be worth your while, however, as you’ll receive £100 for switching your current account to First Direct and the bank generally has happy customers, winning ever customer service award going.
M&S Bank also has a good regular saver, paying 6% on monthly savings of between £25 and £250, but you’ll need to have a M&S Premium current account to qualify.
But this one may not be worth the current account switch. Although you can get up to £150 of M&S gift vouchers for switching your day-to-day banking to M&S, the Premium account costs £10 a month which means over a year you’ll be paying more in current account fees than you could earn in interest on the regular saver account.
Compare current accounts with lovemoney.com