Catches that turn top-rate deals to duds
BANKS and building societies are making it hard for savers searching for top easy-access deals.
They have come up with rates of 1.2 pc or more that place them in the best buy tables — but people must jump through hoops to get the headline rate.
The confusion comes just when savers need easy access to their money, as they smell the first rate rise in more than a decade.
They want to be able to profit from any Bank of England base rate rise when it does come.
Last week, Mark Carney, governor of the Bank of England, said interest rates could rise in the ‘relatively near term’.
It is the clearest indication yet that there could be a rise as early as November 2, when the Monetary Policy Committee meets to decide the base rate.
Figures released last week by the Bank of England show savers took £886 million out of fixed-rate bonds in August.
But they put a huge £4.3 billion into easy- access accounts, bringing the total for the past three months to a whopping £12.3 billion.
Tesco is the latest bank to up its rates, raising its Internet Saver to 1.2 pc last week. It joins a host of others such as Kent Reliance, Virgin Money and West Bromwich BS. Even in the High Street, you can earn 1.1 pc or more with Yorkshire BS, Britannia and Kent Reliance.
But you need to look closely behind the headline rate to avoid the catches. Virgin Money’s 1.21 pc on its internet- based ‘ easy- access’ Double Take E-Saver limits you to making just two withdrawals a year. After that, you lose access to your money for the rest of the year, even if you just want to close the account.
You are even more tied up with the 1.2 pc with West Bromwich BS’s internetbased WebSave Single Access. It only lets you take money out once in an ‘ account year’, which runs from May 1 to April 30. If you make more withdrawals, the rate drops to 0.25 pc.
Even more complicated, your money will be transferred to another account in October next year — and there are no details of the rate you will earn.
The Tesco Bank Internet Saver account comes with a 0.8 percentage point bonus that is only paid for 12 months. After that, you earn its standard rate, currently 0.4 pc. But there are no withdrawal restrictions. In the High Street, Co-op Bank, rescued by U.S. hedge funds, pays 1.1 pc on its Britannia Select Access Saver 7 and you can take out your money at any time. But it limits you to four withdrawals a year. Make any more, and you will earn a paltry 0.1 pc for the rest of the year. Withdrawals are even more limited with Yorkshire BS Single Access Saver 4 at 1.1 pc. You can take money out just once a year. But on the day you do so, you can make as many as you like. Unlike the Virgin account, you can close this at any time, even if you have made a withdrawal. The best account for a combination of best rate and true easy access to your cash comes from Kent Reliance Easy Access 21 at 1.27 pc, launched yesterday and available online, by post and in branch. Next best is Coventry BS Easy Access at 0.85 pc.