Post Office leads the market with new easy access savings account

ReenaSewraz
by Lovemoney Staff ReenaSewraz on 29 May 2012  |  Comments 7 comments

The Post Office has taken top spot with its new easy access savings account.

Post Office leads the market with new easy access savings account

It’s not easy for savers at the moment. Inflation threatens to devalue money put away, pitiful rates mean it is harder to fight this battle and sometimes minimum deposit restrictions - as well as withdrawal limits - are imposed on the best accounts.

With all this to contend with it can be a minefield to navigate the right place to leave your money to chase the best returns.

With an instant or easy access savings account, you can add to your savings pot at any time and (with most) withdraw your cash whenever you want. Because of this flexibility, firms typically offer lower rates compared to other saving options.

So let’s take a look at the new market-leading easy access account from the Post Office to see if it can cover all the bases savvy savers are looking for.

The Post Office Online Saver Issue 5

The first thing to note about the Post Office Online Saver Issue 5 is the rate. With the account you'll earn 3.17% AER on your cash, and you only need £1 to get started.

The account is truly easy access as it offers unlimited withdrawals, so you can ensure your money is earning a nice rate of interest but is readily available in an emergency.

The nearest rival account is the Nationwide BS MySave Online Plus, but you would need a £25,000 deposit in order to qualify for the top 3.17% rate (a £1,000 deposit will get you a much lower rate of 2.85%). What's more, with the Nationwide account, you are only able to withdraw once, which doesn’t really make it easy access at all.

So what are the best easy access accounts available at the moment for savers with only a modest investment?

Top 10 easy access accounts you can open with just £1

Account

Interest Rate AER

Withdrawal limits

Bonus

Post Office Online Saver  Issue 5

3.17%

None

1.52% bonus for first 12 months

Coventry BS
Online Saver (3)

3.15%

Four penalty free withdrawals per year

1.15%  bonus for first 12 months

ING Direct Savings Account

3.10%

None

2.56% gross bonus fixed for 12 months

Principality BS e-SAVER Issue 5

3.01%

None

1.36%  bonus for first 12 months

Allied Irish Bank (GB) Savings Direct
Easy Access Reward Account

3.00%

Four penalty free withdrawals per year

1.50% bonus fixed for five years

Santander
eSaver Issue 5

3.00%

None

2.50% bonus for first 12 months

Tesco Bank Internet Saver

2.80%

None

1.55% for 12 months

Virgin Easy Access E-Saver Issue 2

2.60%

None

Bonus free

Barnsley BS Online Saver Issue 2

2.50%

None

Bonus free

Allied Irish Bank (GB) Easy Access Account Issue 3

2.50%

None

Bonus free

It’s not all easy with easy access accounts

There is one key thing to remember with an easy access account that makes them a bit more complicated - some come with a bonus.

These accounts have an advertised rate that includes a boost which expires after a period (usually 12 months). At this point your savings are dumped onto a significantly lower rate of interest and you will need to remember to move your savings on.

Some people view bonuses as a bit of a gimmick and prefer the peace of mind a bonus free account can provide. However, as you can see from the table, these accounts offer significantly lower rates. The best I was able to find that allowed you to start saving with just £1 was a rate of 2.60% from Virgin.

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Comments (7)

  • unsworthsteve
    Love rating 23
    unsworthsteve said

    And for the avoidance of doubt, the Post Office Online Saver accounts do not operate the faster payments service (or at least issues 4 and prior did not).

    I dont like one year bonus accounts at all either, but at least with the PO they seem to come up with a new issue at a very competitive rate well before your old issue is due to flip into a poor rate so you can easily switch. Like other banks they will annoyingly require you to take your money out of the old issue and close it before applying for a new one (so you will lose a few days interest in the transfer process), but the mechanics of doing so are relatively easy online.

    Another tip with the PO. Make sure that you specify a nominated account (an account to which you can withdraw money) when you open the account and check that it has been processed and is visible on the internet well before you are likely to need it. Nominated account instructions will not pass from one issue to the next. It is annoying to find that your money is locked in if your nominated account is not set up and you will have to wait a week for a new nominated account instruction to be effective.

    Report on 08 June 2012  |  Love thisLove  0 loves
  • pastsellby
    Love rating 6
    pastsellby said

    From this weekend (9/6/12) Santander have raised the rate on the eSaver Issue 5, for existing and new customers, to 3.20% aer (annual interest) or 3.15% (monthly interest).

    What they've done is increase the bonus rate to 2.7% (from 2.5%) for the first 12 months.

    They probably want to see their name at the head of the list for a while.

    (In my recent experience, customer service is still dire!)

    Report on 11 June 2012  |  Love thisLove  0 loves

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