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Savings accounts: the tricky terms that could cut your rate or lock up your cash

Find out what you need to watch out for

While savings rates have become increasingly attractive over the past few months, beware of the terms and conditions – some of the best savings accounts have restrictions that you need to navigate to protect your nest egg.

While these accounts might be billed as instant access, many have blocks to withdrawing your money. Others offer short-term interest rates that then revert to much lower levels, or require high minimum deposits.

Which? has highlighted what you need to look out for, and which accounts are best for your savings.


What are the best savings account rates?

The table below shows the instant-access savings accounts with the top rates currently on the market.

Account AER Minimum initial deposit
Coventry Building Society Limited Access Saver 1.35% £1
National Counties Building Society 4th issue Classic Saver 1.35% £5,000
Bank of Cyprus Online Easy Access Account 1.34% £1
Post Office Online Saver 1.33% £1
RCI Bank Freedom Savings Account 1.30% £100

Source: Which? Money Compare. Correct July 2018.

But while these rates are attractive, they don’t tell the full story.

The top account from Coventry Building Society is also the one with limited access, as its name suggests.

While you can access your money instantly, you’re restricted to three no-notice withdrawals per year, with the ‘year’ beginning on the date that the account is opened. For any additional withdrawals, you’ll be charged an equivalent of 50 days’ interest on the amount you’re withdrawing.

Another thing to watch out for is whether the AER rate is set to change.

While you’re able to access your money freely with the Post Office and Bank of Cyprus accounts, you should note that the high rates are only available for the first 12 months.

After this time, the Bank of Cyprus rate falls to 0.85% AER, while the Post Office account plummets to 0.26% AER.

Other accounts have higher minimum deposits, with National Counties Building Society requiring a £5,000 minimum deposit.

So, if you don’t want withdrawal restrictions, time-limited interest, or high minimums, your best bet is RCI Bank’s Freedom Savings Account – which is also a Which? Recommended Provider.

Which? Recommended Providers are companies that have been rated highly by the respondents to our unique customer survey and have products that meet the high standards of our researchers.

Best cash Isa rates: instant-access

There is a similar story with cash Isas. The table below shows the top rate instant-access accounts, but it’s important to dig deeper.

Account AER Minimum initial deposit
Al Rayan Bank Instant Access Cash Isa 1.35% (EPR) £50
Virgin Money Double Take Cash E-Isa 1.3% £1
Shawbrook Bank Easy Access Cash Isa 1.3% £1,000
Paragon Easy Access Cash Isa 1.25% £1
Post Office Online Easy Access 1.22% £100

Source: Which? Money Compare. Correct July 2018.

Virgin Money’s Double Take cash Isa offers instant access to your money, but you can only make two withdrawals per calendar year – no further withdrawals are permitted.

The only alternative is to either fully close your account or carry out a closing transfer of your Isa to another account.

Again, the Post Office account only offers 1.22% AER for the first 12 months, before it drops to 0.25% AER – so you’ll have to move your money after a year if you want to earn a competitive rate.

Which? Money Compare allows you look at hundreds of providers and compare savings accounts to find the best deal. You can also use the tool below to work which type of savings account might be best for you.

Other account terms to look out for

While many accounts hint at their limited access terms in their names – the two-withdrawal limit from the Virgin Money Double Take, for instance – it’s not always obvious, so you should always take care to read the T&Cs.

Skipton Building Society’s Super Tracker Cash Isa account, with a 1.02% AER, is billed as being instant access, but you’re only permitted two partial withdrawals per year until 30 June 2020, with the year resetting on 1 July each year. If you want to access your money a third time, you’ll need to close your account.

The Sainsbury’s Bank Defined Access Saver Issue 5 account offers 1.30% AER on savings between £1,000-£500,000, but if you make four or more withdrawals in a 12 month period, your interest drops to 0.5%. So, while withdrawals are technically unlimited, you are penalised.

What’s more, the AER will also drop to this rate if you save less or more than the boundaries stated above. So, a balance of £999 will only earn 0.5% AER.

Earl Shilton Building Society’s Heritage Account, with 1.3% AER, has a mix of restricted withdrawals and minimum withdrawal amounts.

To qualify for the ‘bonus’ AER, you can only make up to four withdrawals per year, and the minimum for each of these is £250, to be taken out by cash or cheque. Breaking these terms means the AER dives to 0.25%.

What else can I do with my savings?

If you know you’ll want the option of accessing your savings several times a year, you could consider a notice account.

These exist as both savings accounts and cash Isas, and stipulate that you give your provider a certain amount of notice (most commonly 30, 60 or 90 days) before you can withdraw your cash.

For this degree of inconvenience, you’re often rewarded with a higher AER. And, crucially, you can make as many withdrawals as you like.

Market leading notice accounts include Charter Savings Bank’s 30 Day Notice account, offering 1.36% AER on minimum initial deposits of £1,000 or more, and Aldermore’s 30 Day Notice Cash Isa that gives 1.05% AER also on balances over £1,000.

For 60 days’ notice, there’s the Charter Savings Bank 60 Day Notice account, which pays 1.46% AER on balances over £1,000, and The Melton Mowbray Building Society 60 Day Notice Cash Isa offering 1.15% AER on balances over £25 – but this is only available to existing customers in certain areas of the UK.

For longer terms, the OakNorth 90 Day Notice Deposit Account pays 1.69% AER on balances over £1,000, while the Earl Shilton Building Society 90 Day Notice Cash Isa has 1.30% AER on deposits over £10 – but this is only available in certain areas of the UK.

Or, if you want to use your cash more freely, you could try a high interest current account.

The best rates are currently from Nationwide’s FlexDirect account and TSB’s Plus account, both giving 5% AER.

Nationwide only offers this rate for the first 12 months on balances up to £2,500, and requires at least £1,000 to be paid into the account each month.

TSB offers the interest on balances up to £1,500, as long as you pay in at least £500 a month and register for internet banking/paperless statements.

Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.

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