Instant Access Savings Accounts - Savings - News - Moneyfacts

News News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

Instant Access Savings Accounts

Instant Access Savings Accounts

Category: Savings

Updated: 31/10/2008
First Published: 11/10/2006

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Rachel Thrussell, Head of Savings at comments on the growing trend, for providers to attach withdrawal terms and conditions to instant access savings accounts.

"Within the traditional definition of an instant access savings account, the concept of incurring a penalty for withdrawals would be a contradiction in terms. Usually if we choose a instant access account to house our savings, this is because we are happy to forsake the highest rates of interest in return for immediate access to our money.

"This week has seen the launch of Alliance and Leicester's Direct Saver, paying 5.25%. But if any withdrawals are made, the interest for that month is lost. The same condition also applies to accounts already offered by First Direct and HSBC, while Cheltenham & Gloucester and Britannia BS deduct 30 days' and 180 days' interest respectively.

ProviderAccountDepositGross rateWithdrawal restriction
Alliance & Leicester Direct Saver£5K5.25%If withdrawal is made no interest will be paid for that month
First Direct E-Savings £14.65%If withdrawal is made no interest will be paid for that month
HSBCOnline Saver£5004.65%If withdrawal is made no interest will be paid for that month
Cheltenham & GloucesterGuaranteed Branch Saver£15.00%All withdrawals on 30 day loss of interest
Britannia BSHomesaver£2506.30%Withdrawals on 180 day loss of interest unless used for a Britannia mortgage
Figures correct at 10.10.06

"Today also sees the Icelandic Bank, Landsbanki enter the UK savings market with Icesave, launching the no notice Internet account, Easy Access. Paying a market-leading rate of 5.20%, which guarantees to beat bank base rate by 0.25% for three years. So while the rates on the above accounts are competitive, equally as good and even better rates can be found on 'no strings' instant access accounts, with the rate guaranteed to be paid regardless of the number of withdrawals made.

"Today's consumers have little time to spend constantly researching their financial products; often they merely demand a simple product offering a consistently decent return.

"Consumers should avoid choosing an account just based on its headline interest rate. It is much better to set out their needs first, whether it be the notice term, where the interest is payable or how the money can be accessed, then choose the best interest paying account from these.

"For consumers not interested in making regular withdrawals, exploring the options of notice accounts or even fixed rate bonds can offer better returns. But it is important to keep some cash readily accessible for any unforeseen circumstances; a mix of accounts can often work well, offering varying liquidity and rates of interest."

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Just 44 savings accounts beat inflation

Inflation recorded another large jump during December, and predictably, this has had a devastating impact on the number of savings accounts that beat it, so much so that you’ll need to lock your money away if you want an inflation-beating return.

Just 47% have money in a savings account

We’re often told of the importance of saving, yet unfortunately, the message doesn’t always get through. Indeed, research shows that just 47% of those surveyed have money in a savings account, and 17% have no savings or investment whatsoever.

How much will you save this year?

Many of us have set savings goals for the year ahead, and planning to budget better and save more will be at the top of many financial resolution lists. But how much are you hoping to squirrel away? Encouragingly, many people have impressive targets.