New analysis of the top 50 instant access savings accounts for balances of £5,000, commissioned by Investec, reveals that only 26 of the top 50 instant access savings accounts are ‘clean’ and don’t have penalties, restrictions for withdrawing money, or rely on short-term bonuses to inflate returns. The corresponding figures for the top 20 and 10 instant access savings accounts are 13 and four respectively.
Investec’s research, which was conducted by Andrew Hagger of MoneyComms, reveals that 17 of the top 50 instant access savings accounts limit the number of withdrawals customers can make, and 11 charge interest penalties or reduce the interest rate paid to savers who make more withdrawals than their accounts allow. Six don’t allow any further withdrawals for the year once the maximum permitted number has been reached, and for three, there are restrictions as to who can open them such as needing to have a current account with the provider.
The analysis also reveals that four of the 50 savings accounts have short-term bonuses. The average size of the bonus is 0.26% and on average they last for 12 months. On 30th October 2020, the corresponding figures were 0.34% and 11.1 months respectively.
The average interest rate for the 50 market leading accounts on 18th February 2021 was 0.34%, but this drops to 0.32% once the bonuses expire. The corresponding figures in October 2020 were 0.52%and 0.47% respectively.
|Type of condition, penalty or restriction||Number of the top 50 easy access savings accounts that had this feature (18th February 2021)||Number of the top 50 easy access savings accounts that had this feature (30th October 2020)|
|Short-term bonus||4/50 (8%)||7/50 (14%)|
|Limited withdrawals permitted||17/50 (34%)||16/50 (32%)|
|Lost interest/interest penalty on withdrawals above maximum permitted||11/50 (22%)||7/50 (14%)|
|No further withdrawals permitted in year once maximum is reached||6/50 (12%)||10/50 (20%)|
|Account restricted – e.g. you need a current account from the provider||3/50 (6%)||8/50 (16%)|
|Interest rate drops to lower paying account after 12 months||2/50 (4%)||1/50 (2%)|
Samantha Booysen, Head of Digital Savings at Investec, said: “There is a huge number of savings accounts to choose from, but it is just as important to review their terms and conditions as it is the interest rate they are paying. You need a savings account that not only pays an attractive return, but also allows you to manage your money in the way that you want.”
Andrew Hagger, Founder and Director, MoneyComms, who conducted the research for Investec said: “The easy access savings market has become more confusing in recent years with many providers introducing restrictive terms, limited withdrawals and short-term bonus rates.
“Most savers don’t want to have to worry about a limited number of withdrawals or access penalties, they simply want an account they can pay in to and withdraw from whenever they like – no strings, no sneaky T&C’s, just a plain and simple no nonsense everyday savings account”.