Are instant access accounts always what they seem?
The most popular account amongst savers are instant access and no notice. The majority of savers like the comfort of knowing that if they require immediate access to their money, they can get it. But with some accounts this comes at a price.
Michelle Slade, analyst at Moneyfacts.co.uk, comments:
“Most instant access and no notice accounts allow you to access your money as and when you want it. But on almost a quarter of accounts there are some strings to be wary of when making withdrawals. Some accounts either reduce or pay no interest in the month a withdrawal is made, while others allow only a set number of withdrawals a year. One lender Leeds BS will actually close you account if you make more than two withdrawals each year on its Premium Access and Postal Max accounts.
“Some of these accounts pay market-leading rates but just by making a few withdrawals a year, you could lose out on hundreds of pounds of interest. The Britannia BS Homesaver is aimed at those looking to save a deposit to buy a house. If you needed to access your money and made 5 withdrawals a year on a balance of £10K you would of lost £563.72 in interest.
Institution |
Account |
Gross Rate on £10K Balance |
Withdrawal Restriction |
Amount of Interest lost on making 1 withdrawal |
Amount of Interest lost on making 3 withdrawals |
Amount of Interest lost on making 5 withdrawals |
Britannia BS |
HomeSaver |
7.25% |
Withdrawals on 90 day loss of interest unless used for Britannia mortgage. |
£189.90 |
£376.44 |
£563.72 |
Abbey |
eSaver Direct |
6.50% |
Rate reduces to 2.75% in month of withdrawal |
£31.00 |
£93.75 |
£157.15 |
Birmingham Midshires |
e-Saver |
6.50% |
No penalty |
£0 |
£0 |
£0 |
Alliance & Leicester |
eSaver |
6.31% |
All withdrawals via nominated current account. No interest paid for month in which withdrawal made except for July when withdrawals are free. |
£56.77 |
£167.60 |
£279.05 |
Citibank |
Reward Saver Issue 2 |
6.20% |
No interest paid in month withdrawals are made. |
£55.72 |
£164.53 |
£273.96 |
Halifax |
Web Saver Extra |
6.10% |
1 penalty free withdrawal per year, then further withdrawals on 30 day loss of interest. |
£0 |
£105.77 |
£210.48 |
Heritable Bank |
Easy Access Issue 2 |
6.06% |
6 free per annum then 30 day loss of interest |
£0 |
£0 |
£0 |
Anglo Irish Bank |
Easy Access Deposit |
6.05% |
No penalty |
£0 |
£0 |
£0 |
Birmingham Midshires Online Saver |
Online Saver |
5.83% |
No interest paid for the month if a withdrawal is made. |
£50.06 |
£149.46 |
£247.92 |
Mansfield BS |
Postal Tracker Three Issue 2 |
5.10% |
3 free withdrawals permitted per annum, then 180 day loss of interest. |
£0 |
£0 |
£277.07 |
Source: Moneyfacts.co.uk 18.4.08 |
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“Thankfully most institutions have products which don’t have penalties for making withdrawals and still pay a high rate on interest. Birmingham Midshires e-Saver pays 6.50% and Anglo Irish Bank Easy Access Deposit pays 6.05%.
“Savers need to make sure they check the terms and conditions before signing up for any account. Make sure the account thoroughly suits your needs, otherwise you could see yourself substantially out of pocket just for accessing your own money. “
Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.
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