New market leading easy access account
Base rate may still be held down firm at 0.50% but savings providers are upping the stakes when it comes to offering the best rates on easy access accounts. Only at the end of May, the Post Office announced a market leading rate of 3.17% (variable) with its Online Saver (Issue 5). Now Santander has trumped the traditional savings provider with its Easy Access eSaver (coincidentally, also Issue 5).
What’s the deal?
Santander is offering a rate of 3.20% with its Easy Access eSaver on balances of between £1 and £2million. However, this comes with a steep 12-month bonus of 2.70%, so after this time, the rate will drop to 0.5%.
Interest on the account is calculated daily and you can choose whether to have it paid monthly or annually. The monthly option will suit those looking to use their savings interest to supplement their income – although note that the interest rate for the monthly option is 3.15%. Here the bonus is 2.65%, so when this comes out the rate will also fall to 0.50%.
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Whichever you choose, interest can either be paid directly into the account or into a non-Santander nominated account. Bear in mind that, if you go for the latter option, the account you nominate cannot be changed once it’s been confirmed.
As it says on the tin, Santander’s Easy Access eSaver account is true easy access, which means you can make unlimited deposits and penalty-free withdrawals totally at your will. You can also manage your account 24 hours a day using the internet or the telephone.
The account is available to new and existing customers and can be opened in single or joint names. In the fortunate event that you have to think about such things, remember the total amount of cover you have per institution under the Financial Services Compensation Scheme (FSCS) is £85,000, or £170,000 if the account is in joint names.
The main catch on Santander’s new easy access offering is that, while the advertised rate looks highly competitive, it incorporates a whopping 2.70% bonus for the first 12 months. This means that after the first year, savers’ returns will drop to a measly 0.50%.
The Post Office account’s Online Saver, on the other hand, has only a slightly lower rate of 3.17% and incorporates a much smaller bonus of 1.52%. This puts returns after the first year on this account at a much more respectable 1.65%.
So if you feel you won’t be inclined to move your money when the bonus rate expires, the Post Office account could still be the best option. However, bear in mind that both Santander and the Post Office’s headline rates and underlying bonuses are variable.
As you can only open and operate Santander’s Easy Access e-Saver account remotely (online or on the telephone), it will not suit savers who value face-to-face contact of a branch.
What’s the verdict?
If you are a casual kind of saver who is simply looking for somewhere to stash some rainy-day cash you intend to dip in and out of, this account is a winner. It pays the current market leading rate and is simple and hassle-free to open and operate.
Santander’s Easy Access e-Saver account is also good for longer-term savers who are looking for the best returns but are reluctant to forfeit access to their cash.
Whichever category you fall into though, it’s important to mark in your diary when the bonus rate expires and move your cash then to seek out the best returns. Fail to do this and you will be earning the same returns as the current base rate.
With increasingly large bonuses already embedded in the headline rate, it is becomes ever-more important to keep on top of their expiry dates and move your hard-earned savings accordingly.
However, if you don’t feel you will be inclined to do this, there are easy access accounts available that don’t incorporate bonuses at all – and the rate you see (while variable) is the rate you get.
As you can expect from these ‘clean rate’ accounts, they will not be quite as competitive as easy access accounts with built-in temporary bonuses. That said, there are some that are still eye-catching.
The Aldermore Easy Access account, for example, pays a bonus-free rate of 2.75%, although this is on balances of £1,000 or more. And the rate on this account comes with a guarantee that it will remain at least 1.70% above the base rate until March 2013.
Virgin Money's bonus-free Easy Access e-Saver is also offering a competitive 2.60% – and it can be opened with £1.