Best buy easy-access accounts: Rates creep higher

Easy-access savings rates are nudging upwards with providers seemingly jostling for customers.

Investec has increased the rate on its online flexi saver from 0.45 per cent to 0.58 per cent. It comes after Skipton Building Society increased its easy-access rate last week to 0.6 per cent.

Top rates on these bread and butter accounts have been in the 0.4 to 0.5 per cent range for most of the year, since falling from 1 per cent last summer. 

Savers now have three easy access savings providers paying in excess of 0.5 per cent to choose from.

Meanwhile, Coventry Building Society also increased its savings rates last week – its limited access saver account now pays 0.55 per cent.

The average easy-access account pays just 0.18 per cent interest, according to Moneyfacts, suggesting that savers can typically triple their rate by moving their cash.

Many savers will be earning far less than this, often with their cash held with large banks paying between 0.01 per cent and 0.06 per cent interest.

Among the worst is HSBC, along with Lloyds (including Halifax) and NatWest with a rate of just 0.01 per cent – just 10p interest a year on £1,000.

The increases from Coventry, Skipton and Investec is good news for savers, according to James Blower, founder of the Savings Guru.

‘Firstly, the rates are a big improvement on the 0.4 per cent to 0.5 per cent range that the best buys have been in for most of 2021, since they started to fall from the 1 per cent level last September.

‘Secondly, Coventry, Skipton and Investec are larger savings providers so have bigger balance sheets which can support the strong inflows of customers they will see with these rates.

‘Whereas some of the small new entrants could only cope with the inflows these rates will generate for a couple of days, it is likely that these three will hold here for a few weeks and possibly into September.

‘This increases the likelihood that other banks and building societies will follow suit and increase their rates to compete.

‘I’d be surprised if we didn’t see at least one more provider join that group paying 0.55 – 0.6 per cent or even possibly go slightly above.’  

What should savers consider when choosing an easy access account? 

Savers looking for the best easy-access savings deal would be wise to always double check how accessible their cash will be once in the account.

Investec’s easy-access account pays interest on balances between £5,000 and £250,000, provides instant access to savings, and allows unlimited deposits and withdrawals to a linked current account.

However, market leader Skipton’s easy-access account limits savers to three withdrawals a year whilst Coventry allows six per year after which savers forfeit 50 days interest.

The minimum balance requirements are also a major consideration for savers.

Investec allows unlimited withdrawals, both it and Skipton require £5,000 to open an account as opposed to just £1 for Coventry.

Rachel Springall, personal finance expert at Moneyfacts said: ‘Easy-access accounts are ideal for savers who want a flexible pot. 

‘But two things to keep in mind is that these rates are variable so can change anytime, plus some easy access accounts limit the number of withdrawals you can take within the year.’

One alternative for savers, who are concerned at the prospect of losing access to their cash for a fixed time period, is to opt for a notice account.

Savers can achieve higher returns albeit having to provide a few month’s notice to withdraw their cash.

For example Hampshire Trust Bank is currently offering a rate of 0.85 per cent, although savers will need to give 95 days notice to withdraw funds.

For those savers looking to stash away cash for a year or more and don’t require access to their cash, better returns can be achieved by turning to a fixed rate deal, where there has been more competition and subsequently far better rates than instant-access.

The best one year fixed rate account, offered by Gatehouse Bank, is currently paying interest of 1.1 per cent, while the best two-year deal by Zopa Bank is paying 1.26 per cent.

Blower said: ‘Easy-access accounts are great for savers who want access to their money, are saving for emergencies or are building a savings pot for an event in the near future such as a holiday or wedding.

‘However, if you are saving for something with a longer term horizon, or you don’t need access, then it’s worth looking at a regular savings account, a fixed rate bond, or a notice account where the rates are significantly higher.’

Savings accounts

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