Find a savings account to satisfy your needs

Q: I have a savings account with ING, which started at a really good rate but has now gone down to 0.5%.

I need to withdraw money from it every November to pay caravan site fees, so I want to put the money into an account where I get a good rate of interest but don't get penalised for withdrawing money. Can you help?

A: Philip Pearson is a partner at P&P Invest in Southampton

For the past two-and-a-half years, interest rates for savers have been on a downward trend and they are now at rock bottom. Unfortunately there is no expectation of any improvement for some time.

You are certainly not alone in discovering that a deposit account that once provided an attractive rate of interest is now paying less than 1%.

Unfortunately, it is common practice for banks to entice savers in with an initially good level of interest then slash this rate in due course - hopefully without them noticing. It's a good idea to compare savings rates on a regular basis to ensure that you are getting the most competitive terms.

It makes sense also to obtain interest free of tax and this can be achieved by using your cash ISA allowance. Up to £5,340 in the current financial year can be invested with the interest paid tax-free.


The most competitive rate presently available is from the AA Internet Access ISA (minimum deposit £500), which pays 3.5% and allows unlimited access to your money. This includes a 1.35% bonus that ends after 12 months. It is worth remembering the interest rate is variable and could reduce at any time.

Check out this week's best savings rates

An alternative approach would be to select a fixed rate of interest for a 12-month period - either in an ISA wrapper or using a fixed-rate bond. You mention you'd need to access your savings each November, so you could time the opening of a fixed-rate one-year account or ISA to coincide with this.

That way you could benefit from a guaranteed higher rate, without suffering penalties for withdrawing your money.