There's a new table-topping easy access savings account, which should be top of your wish-list!
The Easter holidays are just a matter of weeks now, and the glint in my other half’s eye tells me that means one thing – it’s time to get decorating.
When it comes to paying for such DIY, there are plenty of options in terms of credit, but thankfully since we bought we have been putting a little aside each month. That’s the magic of an easy-access account – our money isn’t locked away forever, we know when we are going to need it and can access it with the minimum of fuss.
If you are just starting out on the savings journey, an easy access deal is likely the best place to start. Even better, there’s now a new table-topping easy access deal to consider!
The Lloyds TSB Incentive Saver
The Lloyds TSB Incentive Saver offers a marvellous 3.04% AER on balances from £1 to £50,000 for 12 months.
This is easily the best rate in the market, so if you want to get the most from your money, it’s definitely the top option. With the Incentive Saver interest is paid on a monthly basis, while at the end of the 12 months the account converts into an Easy Saver, which currently pays 1.60% AER in interest.
However, there are a few things to bear in mind which make the Incentive Saver account a bit different to some of the bog-standard easy access accounts on the market today.
The attached current account
One feature of the Incentive Saver is that it is only open to customers who have signed up to Lloyds internet banking. In other words, you need to have a current account with Lloyds as well.
Ordinarily I’m not a fan of any account that requires you to open even more deals with the provider in question, but on this occasion I actually quite like it as the Lloyds TSB Classic current account is actually pretty nifty.
So long as you pay in £1000 a month, you add Vantage to the Classic current account absolutely free of charge, and that means a whole host of fantastic bonuses. For starters, the interest rates get a lot better – sums of £1,000 in the Classic current account earn 2%, you get 3% for sums of £3,000 and over, and if you have £4,000 in there you’ll get a whopping 4%.
Ok, that’s not quite as good as the Alliance & Leicester current account, which delivers an incredible 5% on balances up to £2,500, but it’s still very good, especially if you have a large amount of cash you want instant access to.
With the Classic current account, you can also get your hands on commission-free foreign currency, while Lloyds operate a switching service which will move over all of your direct debits for you.
Saving without realising it!
However, my favourite feature of the current account is its Save the Change facility, which will actually help you save money in your Incentive Saver, without even realising!
Every time you use the Lloyds TSB visa card that comes with your Classic current account, Lloyds will round up the amount you spent to the nearest pound. They’ll then transfer that extra money over to your savings account!
So virtually any time you spend any money, chances are you will be boosting the coffers of your savings deal! Sounds a great idea to me!
The catches
Perhaps inevitably, there are a few negatives to bear in mind.
The big one surrounds interest and withdrawals. It’s not uncommon with easy access deals for the interest you enjoy on your money to be reduced on any months when you make a withdrawal. However, with this account, that interest is more than just reduced – it disappears!
Any month in which you make a withdrawal, your money will get a big fat 0% interest.
That’s not a problem if you know that you are saving up for something in particular, and won’t be needing the cash immediately. So if you are putting £500 a month aside to pay for a holiday for example, and know that you will be booking that holiday in six months’ time, you will still benefit from the market-leading rate of interest for those six months.
The problem comes if you are hit with a surprise expense. Say your boiler packs in, and you need to buy a new one – you may not need to use all of your savings, but the money that is left in the account will go a month without earning you a penny, which is a big drawback.
Still, it’s nowhere near big enough to put me off the Incentive Saver account. The fact is, if one of those surprise expenses do come along, I’d always recommend putting it onto a credit card so that you benefit from Section 75 of the Consumer Credit Act, which gives you extra protection as a consumer, as the provider becomes equally liable should anything go wrong with the purchase.
Overall, not only is this the best savings account around, you also get to take advantage of an outstanding current account, which even helps you to beef up that savings account!
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