Online savings accounts are becoming the go-to account for those who want added convenience when it comes to managing their money, but did you know they often pay the best savings rates, too? Our latest research shows just that, which means savers who neglect online accounts could be seriously missing out.
Our data shows that some of the best interest rates are reserved for online customers only, so if you're unwilling or unable to open such a savings account, you could potentially be losing out on the top-paying deals.
In fact, the figures show that savers who neglect online-only one-year fixed rate bonds could find themselves 0.29% worse off, while those who opt for a traditional easy access account rather than an online-only version could lose out on 0.25% in interest. This trend is apparent across the market, as the table below highlights:
|Average rates||Online-only||Rest of market||Difference|
|Easy Access Account||0.59%||0.34%||0.25%|
|One-Year Fixed Rate Bond||1.23%||0.94%||0.29%|
|Two-Year Fixed Rate Bond||1.33%||1.12%||0.21%|
|Five-Year Fixed Rate Bond||1.87%||1.80%||0.07%|
|Source: Moneyfacts.co.uk||Compiled 03.05.2017|
"While it has always been the case that online savings accounts have paid slightly more than their counterparts with other opening methods, today there is a marked divide between the online-only savings account sector and the rest of the market," said Charlotte Nelson, finance expert at Moneyfacts.co.uk.
"A year ago, the difference between online-only accounts and the rest of the market was significantly smaller. For example, the average two-year fixed bond rate difference stood at 0.06%, but this has since shot up by 0.15% to stand at 0.21% today."
It isn't only the average rate difference that has increased over the last year – so too has the number of online-only deals available, with there now being far more online-exclusive products than there were a year ago.
Much of this is to do with the number of challenger banks launching into the sector, as Charlotte explains: "A lot of the newer challenger banks that have come onto the market operate exclusively via the internet, and with competition among these banks high and many of them sitting in the Best Buys, it is little wonder that the rate gap has grown.
"Cheaper overheads is likely to be the main reason behind the trend, as providers who offer these deals are able to change rates easily, without the cost of having to amend expensive displays across a network of branches. Even well-known brands such as NS&I have jumped on the online-only bandwagon, with the highly anticipated Investment Growth Bond only available to those who wish to open the account over the internet.
"Unfortunately, this trend will be worrying for older savers, who are more likely to lack the confidence to use the internet. With branches closing up and down the country, not only do they have less choice on the high street, but any reluctance to move online means they may receive significantly less interest than younger, internet-savvy savers."
Online-only accounts often pay far higher savings interest rates, but if you're not comfortable with banking online, you'll still want to find a top-paying alternative. Luckily, you've still got some great options – the figures quoted above are only averages, and if you do some digging by checking out our savings Best Buys, you can find some non-internet accounts that can rival their online exclusive counterparts.
Yorkshire Building Society's top-paying easy access account, for example, pays a market-leading 1.15% (including a 12-month 0.55% bonus) and can be opened in branch or by phone, while providers such as BLME, AgriBank and Union Bank of India pay some of the top fixed bond rates and can be managed via similar means. Many building societies offer accounts that can be managed in branch, by post and by phone, too, so don't be too disheartened.
Nonetheless, these days there are growing number of deals that are online-only, so it could pay to become a bit more internet-savvy. Check out the best savings rates to see the kind of options available, or use our savings search tool to find those accounts that can be exclusively operated online.
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