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Revealed: savers with small deposits miss out on the best savings rates

More than 400 savings accounts are not available to people with less than £1,000 deposit

Savers who have less than £1,000 to put into a savings account or Isa are excluded from nearly half of the general saving accounts on the market, exclusive Which? research has found.

Out of 883 savings accounts we researched, a total of 407 (46%) require an initial minimum deposit of £1,000 or more.

And in the vast majority of cases, those with higher amounts to deposit benefit from the best rates in the savings account and Isa market.

The research covers all available fixed-rate and instant-access savings accounts with no notice required, as well as equivalent cash Isas.

Which? has analysed the market and the most competitive rates for savings accounts which require a deposit of less than £1,000 are shown below.


What do the best-rate accounts for small deposits offer?

Which? found 476 (54%) of the 883 specific savings accounts listed by data company Moneyfacts.co.uk ask for a minimum initial deposit of less than £1,000.

We have not included Help to Buy Isas, Junior Isas, children’s savings accounts, and notice savings accounts and Isas in the analysis, as they do not easily allow for like-for-like comparisons.

The highest interest-paying rate offered is 2.49% AER with Masthaven’s five-year fixed-rate bond account. It requires a minimum deposit of £500.

The table below shows the highest rates for fixed-rate and instant-access Isas and savings accounts which can be opened with an initial deposit of less than £1,000, according to Which? Money Compare.

Type of account Provider AER Minimum
initial deposit
Instant access savings account Marcus by Goldman Sachs, Online Saving Account 1.50% £1
Instant-access Isa Coventry Building Society, Easy Access (Online) 2 1.50% £1
One-year fixed rate account Atom Bank, 1 Year Fixed Saver 2.03% £50
One-year fixed rate Isa AA 1 Year Fixed Rate Isa Issue 14 1.56% £500
Two-year fixed rate account Atom Bank, 2 Year Fixed Saver 2.30% £50
Two-year fixed rate Isa Virgin Money 2 Year Fixed Rate Cash E-Isa Issue 379 1.82% £1
Three-year fixed rate account Atom Bank, 3 Year Fixed Saver 2.30% £50
Three-year fixed rate Isa Dudley BS Three Year Fixed Rate Cash Isa Issue 2 1.91% £100
Four-year fixed rate account Masthaven 48 Month Flexible Term Saver 2.22% £500
Five-year fixed rate account Masthaven, 5 Year Fixed Term Bond 2.49% £500
Five-year fixed rate Isa Metro Bank Fixed Rate Cash Isa Issue 7 2.10% £1

Source: Which? Money Compare. 17.05.19

Bigger deposits offer best savings rates

Which? found that savers with at least £1,000 to deposit get more options with certain types of accounts. The options for fixed-rate savings accounts are particularly stark compared to the ones for people with less than one thousand pounds.

There are 300 fixed-term savings accounts on the market currently which require an initial deposit of £1,000 compared to 125 fixed-term savings accounts which can be opened with less.

There are more options for savers with smaller deposits in the cash Isa market, with 74 requiring an initial deposit of £1,000 compared to 104 that can be opened for less.

There are 33 saving accounts with no notice period which require a minimum initial £1,000 deposit, and 247 that can be opened for less.

Of these, 145 can be set up for just £1 and offer instant access to your savings.

So are you better or worse off if you have less than £1,000 to deposit? As the head-to-head comparison in the table below shows, savers will small deposits miss out on the best rates in the vast majority of cases.

Only instant-access savings accounts and Isas pay higher rates for deposits under £1,000 compared to accounts only available to those with more than £1,000. In every other case, the rate is either the same or higher for those with more savings.

That said, in some cases, the difference in rate is just a few percentage points.

Account type Highest-rate under £1,000 Rate (AER) Highest rate over £1,000 Rate (AER)
Instant-access saver Marcus by Goldman Sachs, Online Saving Account 1.50% Shawbrook Bank, Easy Access – Issue 14 1.43%
Instant-access Isa Coventry Building Society, Easy Access (Online) 2 1.50% Shawbrook Bank, Easy Access Cash Isa – Issue 5 1.43%
One-year fixed rate account Atom Bank, 1 Year Fixed Saver 2.03% Bank of London & The Middle East, 1 Year Premium Deposit Account 2.20% (EPR*)
One-year fixed rate Isa AA 1 Year Fixed Rate Isa Issue 14 1.56% Charter Savings Bank, 1 Year Fixed Rate Cash Isa 1.62%
Two-year fixed rate account Atom Bank, 2 Year Fixed Saver 2.30% Al Rayan Bank, One Year Premium Deposit 2.42% (EPR*)
Two-year fixed rate Isa Virgin Money 2 Year Fixed Rate Cash E-Isa Issue 379 1.82% Charter Savings Bank, 2 Year Fixed Rate Isa 1.82%
Three-year fixed rate account Atom Bank, 3 Year Fixed Saver 2.30% Al Rayan Bank, 36 Month Fixed Term Deposit 2.52% (EPR*)
Three-year fixed rate Isa Dudley BS Three Year Fixed Rate Cash Isa Issue 2 1.91% Shawbrook Bank, 3 Year Fixed Rate Cash Isa Bond – Issue 13 1.96%
Four-year fixed rate account Masthaven 48 Month Flexible Term Saver 2.22% Bank of London & The Middle East, 4 Year Premium Deposit Account 2.50% (EPR*)
Five-year fixed rate account Masthaven, 5 Year Fixed Term Bond 2.49% Bank of London & The Middle East, 5 Year Premium Deposit Account 2.70%
Five-year fixed rate Isa Metro Bank Fixed Rate Cash Isa Issue 7 2.10% Shawbrook Bank, 5 Year Fixed Rate Cash Isa Bond – Issue 16 2.30%
  • *These accounts pay an Expected Profit Rate, in accordance with the principles of Islamic finance. Source: Which? Money Compare, 17.05.19

Find out more: How to find the best savings account

If you have a deposit of more than £1,000

Savers who have £1,000 or more to open a new account can access higher interest-paying accounts, although in some cases there are caveats.

For example, the top three-year fixed-rate bond from Al Rayan Bank pays 2.52% expected profit rate compared to the best-rated equivalent account from Atom Bank which pays 2.30% AER and can be opened with under £1,000.

In another comparison, the Bank of London and the Middle East’s four-year fixed-rate bond pays 2.50% expected profit rate – considerably more than the 2.22% AER offered by the best under-£1,000 deposit account from Masthaven.

Al Rayan and Bank of London and the Middle East do not pay interest – they pay an expected profit rate from investments made under the principles of Islamic finance. The rates are often market-leading, but it is worth keeping in mind that the return is slightly different from a traditional account.

This means there is a small possibility your returns may be lower, although you’ll be notified in advance if this is the case.

The table below shows the highest returns on offer for savers with more than £1,000 to deposit.

Provider/Type of account AER Minimum deposit
Bank of London and the Middle East, 7-year bond 2.75% EPR* £1,000
Gatehouse Bank, 5-year bond 2.75% EPR* £1,000
Bank of London and the Middle East, 5-year bond 2.70% EPR* £1,000
Secure Trust Bank, 7-year bond 2.70% £1,000
  • *These accounts pay an Expected Profit Rate, in accordance with the principles of Islamic finance. Source: Which? Money Compare, 17.05.19

Regular saving accounts offer alternative option

Regular savings accounts that often pay rates of return that outstrip inflation, and could be an option for savers with smaller deposits. Our research found none of these regular savings accounts require you to pay more than £100 a month.

To open some of these accounts, however, you would need to have a current account with the provider.

First Direct, HSBC and M&S Bank all have regular savings accounts that pay a market-leading 5% AER for 12 months, but only existing current account customers are eligible.

Unlike fixed-rate bonds or instant-access accounts, which allow you to deposit a lump sum, the amount you can pay into a regular savings account will be limited – maximum monthly deposits are typically around £250. Moreover, the rates are only payable for a limited time such as 12 months.

Interest-paying current accounts to grow balances

You could use your current account for savings. Many interest-paying current accounts still offer returns on small balances, but you will need to pay a minimum monthly amount to qualify for interest.

Nationwide’s FlexDirect account pays 5% AER on balances up to £2,500 for the first 12 months, while TSB still offers 5% AER on £1,500 on its Plus account, although this is reducing to 3% in July.

Danielle Richardson also contributed to this research.

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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