Top sav­ings ac­count pays 10 times the av­er­age

The Daily Telegraph - Your Money - - READERS’ LETTERS - Amelia Mur­ray

The top easy-access sav­ings ac­count now pays al­most 10 times more than the av­er­age rate, al­though savers are warned the best deals will not last long.

The five high­est-pay­ing sav­ings ac­counts now of­fer an av­er­age rate of 1.2pc. In con­trast, the av­er­age easy­ac­cess rate is just 0.14pc, ac­cord­ing to the lat­est Bank of Eng­land data.

The top rates are also com­ing from smaller providers, rather than the big banks.

This week RCI Bank, the French provider, in­creased the rate of its Free­dom Sav­ings ac­count from 1.2pc to 1.3pc, push­ing it to the top of the best­buy ta­bles. The ac­count can be opened on­line with £100.

Kent Re­liance also launched a new easy-access ac­count this week, pay­ing 1.27pc to those who have £1,000 or more to save. Cus­tomers with bal­ances be­tween £1 and £99 will earn just 0.1pc.

A bal­ance of £15,000 will yield £190.50 in a year with Kent Re­liance or £195 with RCI Bank.

Savers should also be aware of how their money will be pro­tected.

For ex­am­ple, RCI Bank is not cov­ered by the Fi­nan­cial Ser­vices Com­pen­sa­tion Scheme. This pro­tects sav­ings up to £85,000 held by au­tho­rised fi­nan­cial ser­vices in the UK.

In­stead RCI Bank sub­scribes to the equiv­a­lent scheme in France, the Fonds de Garantie des Dépôts et de Ré­so­lu­tion, which will com­pen­sate savers up to €100,000 (equiv­a­lent to £89,264) if the bank goes bust.

At the cur­rent ex­change rate RCI cus­tomers have more of their cash pro­tected than with au­tho­rised banks in the UK. How­ever, this could all change with cur­rency fluc­tu­a­tions. If the euro weak­ens against the pound, savers will find them­selves worse off.

A num­ber of easy-access deals have sprung up re­cently, al­though ex­perts warn they won’t stay around for long.

Rachel Springall of Money­facts, the data firm, said: “We know that these hikes don’t tend to last on the mar­ket for too long due to de­mand.”

She added: “How­ever, fixed-rate bonds have been ris­ing with grad­ual in­creases since the start of the year.”

Those look­ing for higher rates could earn more from cur­rent ac­counts and reg­u­lar savers, which pay 5pc, al­though these rates will be paid on smaller sums.

For ex­am­ple, Na­tion­wide’s FlexDirect cur­rent ac­count pays 5pc on bal­ances up to £2,500. You must pay in £1,000 a month and the rate drops to 1pc af­ter 12 months.

Tesco Bank pays 3pc on £3,000. Cus­tomers must set up three direct deb­its and pay in £750 a month.

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