Savings on the up — but beware catches

SMALL banks and building societies are leapfrogging each other to offer the best savings rates.

Easy-access accounts now pay three times what they did a year ago. Last week, no fewer than seven new banks and building societies raised their rates — even before the base rate rose to 1.75 pc on Thursday — and savers can expect others to follow suit.

But beware: more than half of the 15 top online easy-access deals come with catches. Nationwide 1 Year Triple Access Online Saver pays 1.5 pc. But the rate lasts for only 12 months, after which your money is moved into an instant-access savings account with a lower rate. Currently this pays 0.2pc at best. During the year, you can only make three withdrawals. Any more and your rate plummets to 0.15 pc.

Sainsbury’s Bank Defined Access Saver at 1.55pc limits you to three withdrawals a year. Any more and you’ll earn only 0.8 pc.

Skipton’s new Double Access Saver pays 1.56 pc. But you can take money out only twice a year. If you want to make a third withdrawal, you must close your account.

Branch-based deals are also caught up in the fray. The top three — Skipton Branch Double Access (1.56pc), Newcastle Triple Access Saver and West Bromwich Base Rate Tracker (both 1.5 pc) — all restrict the number of withdrawals you can make.

The best easy-access account with no catches is Zopa’s Smart Saver at 1.81pc, which must be managed via the app.

Shawbrook pays 1.75 pc on £1,000 or more, and Ford Money offers 1.55 pc on deposits of at least £1. Virgin Money pays 1.71pc but only to those who have its M Plus current account. If you want to manage your account in a branch, Kent Reliance pays 1.3pc on balances of £1,000 or more, and Swansea Building Society gives 1.25 pc on at least £1, with no withdrawal restrictions.

Money Mail does not include accounts with catches in our star buy tables. However, if the bonus is small and savers can renew it after 12 months, such as in the case of Marcus by Goldman Sachs, we make an exception. When Marcus raises its rates, those already with an account benefit, too. All too often, providers launch betterpaying accounts for new savers yet leave existing customers earning a lower rate.