Earn a better rate on your savings

This easy access savings account offers a fantastic rate and true instant access. Don't miss out on it, says Jane Baker.

If you're a saver, you'll know that the rates on savings accounts are pathetic at the moment. And with inflation on the rise, times are tough. That's why, here at lovemoney.com, we think it's more important than ever to tell you about the top savings accounts for your hard-earned cash.

With that in mind, I want to tell you about the new Scottish Widows Bank Internet Saver. I really like this account because it offers a highly competitive rate of 3.01%, and true easy access. This great combination is becoming increasingly rare these days. You can find out more about that in my top new easy access savings account video.

Accounts with catches

But hang on a minute. There are two accounts with higher rates: the new Coventry Building Society 1st Class Postal account (issue 4) and the Lloyds TSB Incentive Saver. The Coventry account pays a best-buy rate of 3.15%, which includes a bonus of 1.15% for the first 12 months, while the Lloyds TSB account is slightly behind at 3.04%.

But I'm not keen on either because they lack flexibility when it comes to dipping into your cash.

Coventry Building Society 1st Postal Account

The Coventry account allows just four penalty-free withdrawals a year. And each time you must take out at least £1,000.

If you withdraw your money more regularly than that, you'll be stung with a penalty which is equivalent to a loss of 50 day's interest on the amount you take out. Ouch! Worse still, savers are forced into withdrawing a large amount of cash each time to avoid losing interest, which isn't particularly helpful if you actually need a much lower figure.

No doubt the Coventry would argue four withdrawals should be enough for serious savers, but I'm not buying it.

As if all that wasn't bad enough, you can only operate this account by post. So, to make a withdrawal, you must post them a withdrawal slip. They then post a cheque back to you. And then you have to deposit this cheque, and wait for it to clear. Not exactly a speedy service - and from the day your cheque is issued until the day it clears, you are not earning any interest on that money.

Lloyds TSB Incentive Saver

Meanwhile with Lloyds TSB Incentive saver, you can't make any penalty-free withdrawals. You could earn a rate of 3.04% but only as long as you don't take any cash out - ever. For months when do you have to dip into your savings, you'll earn a derisory rate of 0%.

Bear in mind that after 12 months the Incentive Saver will be converted into an Easy Saver account. So essentially the Incentive Saver works in a similar way to a one-year fixed rate bond - except that the rate is variable, and you can top it up whenever you like.

I think a rate of 3.04% in return for tying up your money for a year seems pretty low, particularly when you think the best one-year bond - the Punjab National Bank 12 Month PBNIL NET Fixed account - is paying a fixed rate of 4%. This makes the Incentive Saver look like a very poor second with a rate that's almost 1% less, and could fall at any time.

To learn more about the nasty catches which regularly trip savers up, check out our Savings rip-offs video.

Why is the Scottish Widows Internet Saver better?

Personally, I much prefer savings accounts which offer true easy access with no withdrawal penalties, or other nasty catches. With the Scottish Widows Bank Internet Saver this is exactly what you get. You can draw on your savings as often as you need to, and you can take out as much - or as little - as you like.

What's more, you can get started with just £1 and manage your savings easily with online transfers between the Internet Saver and your current account.

Finally, there's the rate. I mentioned earlier the account pays 3.01%. This includes a bonus of 1% for the first year. Bonuses are becoming a really common feature of savings accounts. But you need to remember once the introductory period is over your rate will drop off significantly. The chances are you'll need to move your savings to a new best buy at this time. To help you make the most of your savings now and in the future, join our Build up your savings goal today.

Overall, I think the Scottish Widows Bank Internet Saver is the real best buy for savers who want a simple, no strings attached home for their cash. Because, of all the accounts which offer true easy access, the Internet Saver offers the highest rate.

If you have a question about making the most of your savings, why not ask the lovemoney.com community for help at Q&A.

Compare savings accounts at lovemoney.com

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