Easy access savings accounts are great for those who need quick and easy access to there savings, whilst also enjoying the the benefit of a high interest rate.
These accounts allow you access to your money as and when you need it - without any restrictions. These accounts never used offer the easy access that they offer today, Withdrawing money could take anything from days to weeks to process.
However, today these accounts allow you to withdraw your money almost instantly without any resistrictions.
Introductory offers that end
When new easy access accounts are first introduced into the market they normally offer a higher interest rate than normal. The reason for this is because the bank or building society offering the account needs to make money and the high interest rate is an effective way to attract new customers. This is why you can often find these new accounts in many comparison websites best buys tables. The problem with offering higher interest is it can sometimes cause an overload in applications, with everyone trying to take advantage of the higher rate of interest.
Over time these interest rates tend to become less competitive to other new savings accounts on the market. Therefore, if you have had the account for a year or two its worth while looking around for a new account that can offer you a higher rate of interest on your savings which will benefit you more.
Bonus Interest Rates
Many banks and building societie's often offer special bonus rates, although these are only for a limited period of time normally somewhere six months and a year of opening your account. The extra interest rates normally offer anything upto 1% on top of the current interest rate. These bonus also help improve the accounts position in comparisons website best buy tables giving the account a higher position than normal.
You might notice that the gross rate paid on the account and its AER rate are different. This is because you receive the gross rate on the first day of opening the account but the AER is the average interest rate that you would get for holding the account for the whole year.
Frequency of interest
Interest rates earn on your savings tends change from provider to provider, but it will usually be paid either monthly or annually. Most customer perfer to take the interest on a monthly basis and benefit from compound interest.
Interest rate guarantees
Interest rate guarantees can also be beneficial, for example if an account offers you 0.5% above the bank of england base rate for a period of time, you dont need to worry if base rate increased as any increase will be passed onto your account. So you can be confident that you wont loose out on any interest.
Penalties on interest
Sometimes easy access accounts have hidden charges. Althouh you have full access to your savings as and when you need, some providers will wipe of any interest if you make more than a set amount of withdrawals within one month. Easy access account have some great benefits but if you are likely to need to keep dipping into the account you may find another account will benefit better.
Its important to check whether there are any charges or penalties if you make any withdrawals from your account.
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