Top ‘easy-access’ savings accounts now come with a catch – how to avoid the pitfalls

Savers hunting for the best easy-access accounts are finding the top rates comes with restrictions and extra rules. Easy-access savings accounts traditionally let you put money in and take it out whenever you want without paying a penalty or fee, but in return, the interest rate can also go up and down with little notice. They operate differently to fixed savings accounts – sometimes called bonds – which give you a set amount of interest for a fixed period of time, but don’t allow you to access your money in that time without a penalty. But analysis of accounts that would be traditionally categorised as ‘easy-access’ by comparison websites – because they allow some money to be withdrawn without giving notice – shows that more and more are coming with restrictions. In fact, analysis of the top 20 accounts listed as easy-access on comparison website Moneyfacts reveals that just two contain no limit on penalty-free withdrawals and no extra terms, such as a temporary bonus rate that expires or a rule that money can only be withdrawn to certain accounts. Shorts The analysis shows that the distinction between fixed and easy access accounts is blurring, and that savers need to check the terms of any account they’re using carefully – so here is what to look out for. The majority of the top 20 have restrictions Of the 20 top-rated accounts rated as “easy-access” on its website, Moneyfacts found that nine limit the number of withdrawals a saver can make, while three have limits on the amount that can be withdrawn. There are also restrictions on who can open some of the accounts. Three have an opening restriction, including one that is only available to new customers, one requiring customers to deposit new cash, and one linked to a non-funded account. Bonus rates are widespread with nine of the top 20 giving customers an introductory boost which soon expires. The largest one currently is 3.41 per cent. That means savers comparing the top rates need to look beyond the number at the top of the table and check how long they will be getting it for, what they need to do to qualify and what happens if they need to take cash out. Caitlin Eastell, personal finance analyst at Moneyfactscompare.co.uk, said: “For savers, easy access may give them the impression of unlimited access, but many accounts labelled as such have strings attached. “Easy access accounts are often where households keep their emergency funds or money they need at short notice, meaning the moment a saver needs to access their cash could be the moment they discover the catch behind the headline rate.” When it comes to bonuses, Eastell said it is “crucial” savers understand what they will earn once the bonus expires and prepare to switch to a more generous deal, otherwise they risk their returns falling behind in real terms. She added: “Comparison tables are designed to help savers identify the best deals, but the challenge is making sure that the headline rate doesn’t overshadow the conditions attached to it. “Withdrawal limits, penalties, and bonus periods can have a much bigger impact on the overall value of an account and simply picking the highest rate is not the best choice for everyone.” Bonus chasing can become a trap Searching for the best interest rate on an account is particularly important at the moment. Figures released on Wednesday show inflation is now at 3.1 per cent, and savers will want to ensure they beat this so that they are not losing money in real terms. A bonus can propel an account towards the top of a comparison table, but the rate can fall dramatically when the promotional period ends, leaving consumers earning substantially less without realising it. Doug Abbott, chief product officer at Hargreaves Lansdown, argued that savers should pay close attention to these conditions rather than solely focusing on the initial rate. He explained: “An increasing number of providers are offering a bonus rate on easy access products – this might seem like a good thing at first glance, but savers should always read the small print. “Some rates may only last for a limited period or come with restrictions on withdrawals and deposits. “Failing to properly check the details, or keep tabs on when a bonus rate expires, could leave savers earning less over the long term.” Ultimately, he said that the best rate does not mean the best account if it comes with a number of restrictions attached to it. With 18 of the top 20 easy-access accounts carrying some form of condition, bonus or access requirement, more work may be required than consumers initially expect.