Easy access savings accounts not so easy

Many easy access savings accounts are drawing criticism due to the limitations on the number of times savers can withdraw their cash.

Banks and building societies have been offering new savings products with as much as 2.6 per cent in pre-tax interest rates.  While many savers may not see the benefits to such a low rate, the BoE’s 0.5 per cent base rate makes them more attractive.  Additionally the 0.1 per cent paid out by many personal and business bank accounts makes these easy access savers an attractive option.

Industry experts have been critical over how ‘easy’ it truly is to access your money if you deposit it into such an account however.  These accounts are typically structured with a restricted withdrawal scheme that could jepoardise a saver’s interest rate if they exceed the alloted number of withdrawals within a certain time period.

Some savings products are relatively permissive.  Northern Rock’s easy access Save Up account allows up to one withdrawal every month without losing its 2.08 per cent interest rate.  However most of that rate is comprised of a bonus rate that expires after a 12 month period – which will facilitate a switch on the part of savers to maximise their returns.

The new second issue of the Easy Access Saver from West Bromwich Building Society pays 1.92 per cent after basic tax.  However the bank offers only two withdrawals every year, which can limit savers in the event that they need their cash for an emergency.

For savers looking for the convenience of online banking Coventry Building Society has a product that may be of interest.  The building society’s eNotice saver requires just notice of 30 days before being able to withdraw a portion of a saver’s funds.  Additionally the saver boasts a 2.44 per cent pre-tax interest rate until the end of 2011.

Despite the relatively high rates of return, none of the offerings match or exceed the nation’s current 3.7 per cent inflation rate.

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