I need to issue an urgent warning about easy-access accounts that are dominating the best-buy tables – they may not be as good as they first appear.
Growing numbers of top accounts include a chunky short-term bonus that lasts for just a few months. And if you don’t watch out, your money can be moved into dreadful accounts after just one year.
There is nothing wrong with these accounts. They give you the chance to earn as much as possible on your money, so long as you move it before the rate falls off a cliff. But now bonuses are getting chunkier – over a shorter period.
For example, Shawbrook’s new Bonus Easy Access Savings Account pays a near-top rate of 4.3 pc – but you only get it for the first six months. After this the rate tumbles to 1.5 pc. That gives you an average of 2.9 pc over a year. Oxbury Bank also played the same game with its Easy Access Bonus Base Rate Tracker 1. It paid 4.36 pc including a bonus which lasted for three months at the most.
Sylvia has spotted a rise in the number of accounts that masquerade as easy-access accounts but only let you take money out a few times a year
Cahoot Simple Saver, which pays a headline rate of 4.4 pc, comes with the equivalent of a huge 3.4 pc bonus. You earn this meaty rate for a year, after which the bank (part of Santander) moves you into the Cahoot Savings Account, which pays a dreadful 1 pc.
Post Office Online Saver, at 4.13 pc, is boosted by a hefty 3.13 pc bonus for a year. That, too, will drop to 1 pc after 12 months. Tesco’s Internet Saver pays 4.2 pc, which includes a 3.15 pc bonus. After a year, the rate from the bank – part of Barclays – drops to 1.05 pc.
I have also spotted a rise in the number of accounts that masquerade as easy-access accounts but only let you take money out a few times a year. After your first year, they move you to a duff account.
Nationwide has long done this with its 1 Year Triple Access Online Saver and its Isa equivalent, which pay 3.5 pc and limit you to three withdrawals for the first 12 months. You then end up in an ordinary easy-access savings or Isa account, on as little as 1.1 pc.
Now Coventry BS has followed suit with its 5 Access Saver 1 Year and 5 Access Isa 1 Year, both at 4.15 pc, with five free withdrawals a year. After 12 months, you are moved to an easy-access version at 2.2 pc.
I don’t include bonus accounts or those with restricted withdrawals in the star buys table. If I did, there would be no room for those that pay a consistently good rate. But I do keep you informed of what is on offer.
