Top deals that won’t eat into your nest egg
THOSE worried about the hidden traps on easyaccess accounts have been given a boost.
Ford Money, which launched in April, has raised its Flexible Saver rate from 1 pc to 1.07 pc.
That is just a bit lower than the RCI Bank Freedom account, at 1.1 pc, making it the second-best rate on a catch-free account.
Easy-access deals, which hold £662 billion of savers’ cash, are meant to be the most straightforward way of putting money aside for a rainy day. But savers are often forced to grapple with complicated terms and conditions to get the advertised rate.
One wrong move, such as making too many withdrawals, and your rate may plummet.
Many savers may earn less than other customers due to when they opened their account, as a lot of providers launch a particular account ‘issue’. Once they attract the money they want at that rate, they close it and launch a new issue at a different rate.
For example, Skipton E-saver issue 7, on sale now, pays 0.81 pc. But if you are in issue 2 you earn a lower 0.65 pc. On closed issues 3 and 4 it’s 0.85 pc.
Some top-paying accounts pay a bonus for the first year, after which you earn a low rate.
The Post Office increased its Online Saver rate for new customers to 1.11 pc last week. But after a year in the account, it drops to 0.25 pc.Others move you out of the account after a year. Leeds BS Online Access Account pays 1.05 pc but only until July next year. Your money then moves into an ‘instant access maturity account’, of which there are no further details yet.
Halifax, Lloyds and Santander also move you after a year. At this point they pay as little as 0.01 pc.
Stuck in these accounts, you are unlikely to see the full increase when the base rate does shift upwards.
Top payers which restrict the number of withdrawals you can make include Virgin Money Defined Access Saver, an easyaccess account paying 1.05 pc. It lets you make only three withdrawals a year — any more and your rate drops to 0.25 pc for the rest of the year.
Yorkshire Single Access Saver at 1.1 pc gives you access to your money on just one day a year.
The accounts that stand out for simplicity are National Savings & Investments (NS&I) Direct Saver at 0.7 pc, Ford Money Flexible Saver at 1.07 pc and RCI Bank Freedom account at 1.1 pc. You can run the NS&I account over the phone or online. Ford Money and RCI Bank are only online. With NS&I your money is 100 pc guaranteed by the Government. Ford Money is under the UK Financial Services Compensation Scheme, guaranteeing up to £85,000 if the bank goes bust. With RCI it’s €100,000 (£88,000) under the French deposit guarantee scheme. Ford Money pledges to pay the same rate to all in the same variable account. Its head of savings, Julian Hynd, says: ‘Customers want an account into which they can save without being penalised for taking money out or for staying put. Existing customers will never be worse off than new ones in our Flexible Saver.’ Charlotte Nelson, finance expert at data monitor Moneyfacts says: ‘The link between savings and base rate has been severed. There’s no guarantee that savers in old accounts will benefit from any rise.’