What's in our guide to easy access savings accounts?
- What is an easy access savings account?
- The benefits of easy access savings accounts
- The cons of easy access savings accounts
- The top-paying easy access savings accounts
What is an easy access savings account?
As the name suggests, it’s a cash savings account that offers you fast access to your money whenever you need it, unlike some other types such as notice accounts, where you may have to give 30 or 90 days’ notice (like Premium Bonds for example) to make a withdrawal.
You could also use an easy-access Cash ISA, which protects any interest you earn from the taxman (however, most people don’t now pay tax on their savings interest anyway due to the personal savings allowance).
Easy access savings accounts are often referred to as instant access savings accounts because, theoretically, there is no or very little delay between requesting your withdrawal and your money being transferred into your current account.
The benefits of easy access savings accounts
Easy access savings accounts are among the best places to save your money if you are likely to need it soon, you want to make regular withdrawals or you just want the comfort of knowing you can withdraw it when you need it.
You can still earn a little bit of interest on your money while having the flexibility to get your hands on it whenever you need to. There’s usually no minimum deposit, so you can start with just £1.
There’s no risk to saving in this way because, if you choose a regulated financial institution, your savings will be covered up to the value of £85,000 per institution by the Financial Services Compensation Scheme in case your provider collapses. Some easy access accounts offer bonus rates to entice new customers, but you’ll usually move to a lower rate once the bonus period ends.
There may also be conditions attached to earning a bonus, such as a maximum number of withdrawals, so check the terms before you sign up. There’s nothing to stop you from switching to a new account when your bonus period ends to take advantage of a different introductory offer, so get organised and set yourself a reminder to look for a new deal when your rate drops.
The cons of easy access savings accounts
The main downside is that getting the very best interest rates on easy access accounts is almost impossible. Easy and instant access accounts tend to have much lower interest rates when compared to other types of savings account, and may undershoot the rate of inflation.
You’re likely to get a worse rate in an easy access account than if you were able to lock your money away in a fixed rate savings account. Financial regulator the FCA is currently looking at how to improve interest rates for longstanding savers into easy access accounts, forcing providers to offer customers a single interest rate after their accounts have been open for 12 months.
The FCA’s executive director of strategy and competition, Christopher Woolard, said:
“This will prevent firms from gradually reducing interest rates over time and make them compete for all their customers. The new rate will also make it easier for savers to know whether they are getting a good deal after any introductory offer has expired.”
The top-paying easy access savings accounts
The best buy tables change rapidly, but at the time of writing some of the top-paying easy access savings accounts open to consumers nationwide included:
- Al Rayan Bank Instant Access Cash ISA AER 1.36% with interest paid monthly.
- Marcus by Goldman Sachs Online Savings Account paying 1.35% AER.
- Cynergy Bank Online ISA 1.31% paid yearly. This is an online-only account.
- Leeds Building Society Limited Issue Online Access AER 1.30%. This is an online-only account.
- Ford Money Flexible Cash ISA paying 1.27% AER variable.