Savers looking for a safe place for their cash face a raft of penalties, restrictions and teaser rates
Savers looking for a safe place for their cash face a raft of penalties, restrictions and teaser rates, research conducted on behalf of The Mail on Sunday reveals.
Of the top 50 instant access savings accounts, more than half are not straightforward.
Sixteen limit the number of withdrawals savers can make while eight are only available to certain age groups – or to people who already hold a current account with the provider. The analysis, carried out for the banking group Investec by Andrew Hagger of MoneyComms, also found that seven of the top 50 easy access savings accounts have short-term bonuses.
Short-changed: Of the top 50 instant access savings accounts, more than half are not straightforward
Bonuses are 0.34 per cent and last on average for just over 11 months. Short-term bonuses – also known as teaser rates – lure savers in with an overall competitive rate, which then drops after a few months.
If savers do not remember to move their money when it ends, they can end up worse off than if they had picked a lower rate from the outset. Linda Brown, head of savings at Investec, says: ‘When choosing a savings account you should look to see if a short-term bonus is being used to inflate the interest rate.’
The research looked at the top easy access accounts for balances of £5,000. Easy access savings rates are currently so low that there are just three that beat inflation, according to financial data scrutineer Moneyfacts. All three have restrictions. ICICI Bank UK pays 0.75 per cent, but it is only available to new or existing HomeVantage current account customers.
Furness Building Society’s Student Account pays 0.75 per cent, but can only be opened by full-time students.
Harpenden Building Society’s 21 Club account also pays 0.75 per cent, but is only available to savers aged 18 to 21.
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