My favourite savings account

by Donna Werbner on 24 July 2009  |  1 comment
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This account offers the best of both worlds: a good, guaranteed rate AND instant, easy access. But it might not be around for long...

There's a savings account I really like at the moment.

It's called the ING Direct Savings Account, it's an instant access account and it pays 3% AER.

OK so I know 3% doesn't sound like much. But it is, after all, six times the Bank of England base rate.

There are higher rates out there. For example, Alliance & Leicester Online Saver Issue 5 pays 3.15% while the Barnsley Building Society e-bond pays a juicy 5.4%.

But I like the ING account.

Why?

I don't want to lock my money away

To get that market-leading rate of 5.4% from Barnsley Building Society, you have to lock your money away in the society's coffers for five years!

Now, I think you'd be crazy to lock into a rate today, when savings rates are only set to go up. Plus, I'm saving at the moment for home improvements to my flat, so I need my savings to be accessible.

I don't want to keep switching accounts

But even when it comes to easy access accounts, there are higher rates out there. For example, the Alliance & Leicester Online Saver Issue 5 pays 3.15%.

This is the market-leader, but it's not for me.

It's variable and that means the rate could fall. And personally, I don't want the hassle of a) keeping track of the rate on my account and b) switching accounts all the time.

The best of both worlds

So that's why I prefer the ING Account to the Alliance & Leicester account.

Sure, it pays 0.15% less than Alliance & Leicester, but the rate on the ING account is fixed for 12 months.

That's extremely unusual for an instant access account.

And this account is true instant access - there are absolutely no penalties or sneaky charges or catches for withdrawing your money. It's yours to access whenever you like.

The only problem

The only issue I have with this account is that it's protected by the Dutch compensation scheme, not the UK one.

You actually get more compensation under the Dutch scheme than the UK scheme, and it's highly unlikely ING will go bust. But after being burned by the collapse of Icesave last year, I'm a little bit hesitant myself.

Still, if that doesn't bother you, then I reckon this is probably the best place to stash your savings at the moment.

What do you think?

P.S.  Cost-cutting time!

I'm quite excited this week by our new goals section. Anyone can read them but if you're registered, you can start completing them. Unfortunately, so far, I've only managed to complete 12% of my top goal: Cut the cost of going out. Obviously I need to work on that a bit more before I hit the pub this weekend! Oh dear...