Top new instant access savings accounts

Last week two new best-buys hit the savings market, but will they bring savers any respite?

It’s been a long time since I had anything very positive to say about the savings market. Even when rates have improved a little, high inflation continues to dash savers’ hopes.

If you don’t want to take any risk with your cash, I’m afraid there’s isn’t much you can do except ride it out, and wait for the day when the economy finally normalises and savings rates begin to recover across the board.

But, in the meantime, you should still abide by all the usual rules to ensure you’re still getting the very best deals.

The good news is that last week saw the launch of two new competitive savings accounts. Let’s take a look at what they have to offer and how they compare with the wider market:

Post Office Online Saver

We’ll begin by taking a look at a new easy access savings account. The Post Office has extended its savings range with the introduction of the Online Saver Account. The account offers a rate of 2.75% which propels it onto the best-buy tables. Only the AA Internet Extra Account offers a higher return on easy access savings at 2.80%. The table below shows how the new Online Saver Account compares with other easy access accounts:

Top five easy access savings accounts

You’ll see of the top five easy access savings accounts, four offer the same 2.75% rate including the Post Office Online Saver. These accounts have been ordered according to the bonus rate with the fixed bonuses ranking ahead of the variable ones.

It’s certainly worth looking out for a savings account with a fixed bonus as this guarantees a minimum return for a set period. Most bonuses last for 12 months. A variable bonus - such as the bonus available on the Santander eSaver - is less valuable since it can be reduced at any time and therefore can’t promise savers a minimum rate on their cash.

The Post Office Online Saver offers a relatively small guaranteed bonus of 1.25%, but again you’ll know your rate won’t fall below this level for the next year.

But i?t can’t quite compete with the ING Savings Account which guarantees to pay 2.75% fixed for the next year.? ?In fact, I would be inclined to choose the ING account over the AA Internet Extra Account which, despite offering a market-leading rate now, could feasibly drop below the ?f?i?x?e?d? return from ING before the year is up.

That said, the Post Office Online Saver is still a decent choice? ?w?h?e?n? ?i?t? ?c?o?m?e?s? ?t?o???? offering penalty-free instant access and a competitive rate. Just remember to keep an eye on your savings as you’ll likely need to switch accounts once the temporary bonus period has come to an end?, if you want ?t?o? ?k?e?e?p? ?o?n? ?e?a?r?n?i?n?g? ?a? ?b?e?s?t?-?b?u?y? ?r?a?t?e.

Compensation

You should also bear in mind that savings products from the Post Office are provided in partnership with the Bank of Ireland, and therefore are covered by the Irish Deposit Guarantee Scheme, rather than the UK’s Financial Services Compensation scheme.

This means that in the (unlikely) event of the Post Office collapsing, your savings will be fully protected by the Irish ???Government until 29 September 2010. After that time, the scheme will revert to normal compensation rules where a maximum of €100,000 (currently around £89,000) of your savings per institution will be protected.  

Principality e-ISA

The next competitive new launch is the Principality e-ISA which is a cash ISA from Principality Building Society. This account is a very strong contender since it offers the highest rate on the market. Let’s see how it compares:

Top five easy access cash ISAs (new money)

*Savers must hold a First Direct 1st Account to be eligible.

The Principality e-ISA has made it right to the top of the best-buy table with a market-leading tax-free rate of 2.80%. The account can be opened with just £1 and savers can enjoy penalty-free access at any time (although bear in mind money withdrawn from cash ISAs can’t be replaced if you have already used the full £5,100 allowance for the tax year).  

What’s more, the account also accepts ISA transfers which means you can move cash which has been languishing in old cash ISAs from previous tax years?, and earn the same great rate.

The only downside is the fixed bonus which again is relatively small at 1%.??? ??T?????????????his guarantees a minimum return for the next year, ?b?u?t? the C&G Cash ISA actually offers a higher fixed bonus of 1.70% even though the headline rate is less generous at 2.70%.

But the highest guaranteed rate of all is offered by the First Direct Cash e-ISA at 2.65% fixed until 31 October next year. But unfortunately for some, it’s exclusively available to savers who bank with First Direct and have a 1st Account.

Compare savings accounts at lovemoney.com

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