Search: Best easy access accounts
- Find a higher paying savings account
- Best accounts for long term savings
Banks and building societies are still desperate for our money, but recently the battle for our cash has focussed on the fixed rate market. However, there are signs this is now moving to the easy access arena as well.
Egg, Birmingham Midshires, Intelligent Finance (IF) and Leeds, Coventry and Principality building societies are among the providers that have increased their easy access rates, or launched new deals.
The leading rates are now paying more than 3.0% - great news at a time when the Bank of England base is just 0.5% and the average instant access rate is even lower, 0.15% according to Bank of England figures.
A rate of 3.0% would earn you £285 more interest over a year, than if your money was left in account paying the average rate of 0.15% (this assumes a balance of £10,000).
So what are the best deals?
Birmingham Midshires' Telephone Extra account is paying the highest rate at 3.15% on balances of £1 or more. However, the rate includes a huge bonus of 2.65% which runs for 12 months - once the bonus ends the rate will drop to 1.5% (assuming Birmingham Midshires doesn't alter it within that time), so you should look to move your money again. Another point worth noting, as its name suggests, this is a telephone account - your transactions must be done over the phone.
Leeds Building Society has launched a new internet easy access account paying 3.05%. The minimum investment is £100 and the rate includes a 1% bonus which runs until July 31 2010. And Coventry Building Society's Poppy Save account is paying 3.0% - this includes a 1% bonus for the first 12 months. However, the minimum investment is higher at £1,000 and despite being an easy access account it's not as flexible as some of the other deals - it is a postal account and only four penalty-free withdrawals are permitted each year (you lose 50 days' interest if you make more than that). That said, Coventry will make a donation to The Royal British Legions' 2009 Poppy Appeal each year - 0.25% of your average balance in each 12-month period will be donated to the cause.
Other competitive easy access accounts include Principality Building Society's e-Saver Issue 2 account at 2.85%, IF's iSaver account at 2.85%, Egg's Savings account at 2.80% and ING Direct's Savings Account which is paying 2.75%. A big advantage of the IF deal is that it has no introductory bonus - the other three accounts include 12-month bonuses of 1.20%, 1.55% and 2.22% respectively.
You can earn even more if you fix
While easy access rates are getting stronger, the best savings deals are still available to those who have money they can afford to lock away. The leading fixed rate bonds are paying more than 4.0%.
With the base rate at an all-time low, the next move in interest rates, whenever that may be, should be upwards. It is therefore probably not advisable to lock in to a fixed rate account for longer than a year or two.
However, if you have money you won't need to access in the next couple of years then there are some great deals to take advantage of.
Close Treasury, part of Close Brothers, has a two-year Premium Gold Fixed Term account paying 4.50%. The minimum investment is £10,000 - you need to act quickly if you want to take advantage of this product as it's only available until July 3, and it may be pulled earlier than that if demand is high.
Another option is ICICI's two-year fixed rate HiSave account which has a rate of 4.35% on balances of £1,000 or more.
If you are reluctant to tie your money up for two years and would prefer a one-year deal, Abbey's One-Year Fixed Rate Bond is paying 3.75%, although the minimum investment is high - £25,000. Alternatively, ICICI's one-year fixed rate bond is paying 3.60% with a £1,000 minimum investment.
Don't forget security
If you have a large amount of cash savings, remember that only the first £50,000 held with a single institution that has its own registration with the Financial Services Authority, is totally guaranteed under the terms of the Financial Services Compensation Scheme (FSCS). The limit is £100,000 for joint accounts. If you have more than that you should look to spread your money around between different providers.
Disclaimer: Please note that any rates or deals mentioned in this article were available at the time of writing. Products can be applied for directly.
