A whole raft of savings providers have edged their rates downward in recent weeks as Melanie Wright explores in her article, ‘Why NOW is the time to open a savings account’.
But it’s certainly not all bad news for savers. The Post Office has bucked the trend by launching a new market-leading easy access savings account, which really is open to all. We take a look in closer detail to see if it could be the account for you.
What’s the deal?
The Post Office has launched a new issue (5) of its Online Saver easy access account which – as it clearly says on the tin – can only be opened and operated via the internet.
The account pays a market leading variable rate of 3.17% (gross) which, compared to the 3.01% offered by its previous issue, is a big improvement.
The 3.17% rate comes with a fixed bonus of 1.52% for the first 12 months. This means that at the end of this period, the rate will drop to 1.65%. You can opt to receive this interest monthly or annually.
The Online Saver account is a true easy access deal, allowing unlimited withdrawals with no penalty. And you can top up your savings when you like too.
You can open the Post Office Online Saver with just £1 and, if you’re lucky enough for it to be relevant, it will take a maximum balance of £2m. However, bear in mind that under the Financial Services Compensation Scheme (FSCS), you are only protected up to £85,000 per person, per banking institution.
It’s also worth knowing that the Post Office is an appointed representative of Bank of Ireland (UK) which is authorised and regulated by the Financial Services Authority (FSA).
Not really. Although, like most easy access savings accounts, this deal comes with an initial bonus rate so you will need to make a note of when this expires (12 months after opening the account) and move your money to a better rate. After all, if your returns plummet from 3.17% to 1.65% and it escapes your notice, the benefit of the market leading rate will soon be lost.
While the bonus is fixed for the first 12 months, the account itself is variable so the rate, in theory, could go down. However, given the true easy access nature of the account, it would be simple enough to move your cash if this were the case.
Lastly of course, the account is only suitable for those savers who are comfortable with opening the account and managing their rainy day cash entirely online.
What’s the verdict?
If you are looking to start a savings account and need immediate access to your cash, the Post Office Online Saver account is undoubtedly your best bet.
The account pays the best rate within the easy access accounts arena by some margin. The next most attractive, for example, is ING Direct’s savings account which pays a gross rate of 3.10% with a 2.56% bonus for the first 12 months. The account is also available at a minimum deposit of £1 and can be operated by telephone as well as online. However, if you already have an account with the bank, you won’t qualify as the deal is only available to new customers.
If you think it’s unlikely you will move your cash after the bonus rate expires, have a look at easy access deals which don’t come with a bonus – and where the rate you see is the rate you get.
The market leading of these ‘clean rate’ easy access accounts in return for the same £1 investment is currently Virgin’s Easy Access E-Saver Issue 2 which offers 2.60% - though bear in mind that, while this rate conceals no bonus, it is still variable.