Watch out for small print traps
SAVERS need to be quick to take advantage of top-paying rates on offer — but they must also be sure to sift through the small print.
West Bromwich Building Society closed its WebSave Bonus after it had been on sale for just four weeks. But it is one of many new accounts with increasingly complicated terms and conditions.
Some accounts now offer more than 2.75 pc before tax with easy access — well above the 0.5 pc Bank of England base rate. This is also more than is offered on most one-year fixedrate bonds where your money is tied up.
Unable to attract new savers with their existing accounts — which can pay as little as 0.008 pc after tax (0.01 pc before) — banks and building societies are offering big bonuses to new savers.
The average bonus is more than three times base rate, at 1.66 percentage points before tax, says Moneysupermarket.com, and nine out of the ten top easy access accounts come with a bonus.
But to ensure they can come out with headline rates, marketing men have developed a series of new tricks such as variable, rather than fixedrate, bonuses and restricted access to accounts even though they are classed as easy access.
It makes it all the more difficult for savers to find an account which suits their needs. And it’s set to continue.
Last week Adrian Coles, director-general of the Building Societies Association, said: ‘Maintaining positive inflows will remain a challenge while the bank rate remains low, as savers may seek higher returns elsewhere or opt to repay debt.’
Others with top-paying internet accounts include Egg and Alliance & Leicester, which both come with a big bonus.
If you sign up to an account which comes with a bonus, make sure you move your money when it runs out.
And if you opened a top-paying account over a year ago, check the rate. Its name might be similar to those now showing headline rates, but you will be earning much less. For instance, the AA Internet Savings Account, closed to new savers, pays 0.08 pc (0.1 pc), but AA Internet Extra 3 pays 2.24 pc (2.8 pc) including the bonus.