If you’re setting up an emergency fund or are planning on making a big purchase in the near future you’ll want to have quick access to your savings.
Easy access accounts are perfect if you need the flexibility to withdraw cash at any time, but there are also pitfalls associated with these kinds of accounts. The worst products offer rates as low as 0.05%, so it is important to pick your account carefully and switch if the rate falls.
My Moneywise Best Buy is the Ulster Bank eSavings account, which pays 1.25% to savers. As the name suggests, this is primarily an online account and it has to be set up online, although you can manage it by telephone once opened.
The minimum balance is £1 and there are no restrictions on either how much or how frequently you withdraw your money. But be aware this is a variable rate product, so the interest rate could change at any time.
Save £5,000 in this account for a year and you’ll earn £62.50, based on today’s rate.
This is the best deal available and is some way ahead of the average rate on the market. Data from comparison website Moneyfacts shows the average easy access rate offered by providers in July 2017 was just 0.39%.
This is lower than the 0.56% industry average a year ago, and even further from the 1.03% average recorded in July 2012.
It’s a similar story in the Cash Isa market, where the average easy access rate has fallen from 1.74% five years ago to 0.62% in July 2017.
But savvy savers can easily top that. My top easy access Isa pick is the Sainsbury’s Bank Cash Isa. This product pays 1.01% interest on balances of £500 or more and is available online or over the phone. If you can save £5,000 in this account for a year you will earn £50.50, although this rate is variable and subject to change.
If you want to try and beat these rates but don’t want to fix for a whole year you could consider notice accounts.
These products let you access your cash without penalty, but you must give your bank notice before any withdrawal and some also limit how regularly you can take your cash out. If you’re able to give six months’ notice, the Secure Trust Bank 180 Day Notice (Issue 2) is worth considering.
This has a variable headline interest rate of 1.65% on balances over £1,000 but, as the name suggests, you must give a long notice period before you can access your balance.
This account can only be opened online and you’re limited to a maximum of three withdrawals per calendar year, so there is much less flexibility. A £5,000 balance would earn £82.50 in a year if rates were to stay the same.
In the Isa market the Hinckley & Rugby Building Society 120 Day Notice Cash Isa offers savers a variable interest rate of 1.2%. The account must be opened by post or in one of Hinckley & Rugby’s branches, located across the East Midlands. There is a minimum deposit of £500 and transfers from other providers are not accepted.
|Average easy access Isa rate||1.74%||1.31%||1.20%||1.12%||0.98%||0.62%|
|Average easy access savings rate||1.03%||0.68%||0.63%||0.66%||0.56%||0.39%|
Source: Moneyfacts, 12 July 2017
If you have more than the FSCS protected limit for deposits of £85,000 per person, per firm, consider this account to spread your money. It gives instant access to your cash but you are limited to three withdrawals per year. It pays 1.05% and can be opened in branch, online, over the phone and by post. Of course, you can only deposit up to £20,000 into an Isa this tax year, but the account does accept transfers from old Isas.