The best easy access savings account to make hundreds of pounds – and the one that could trick you out of cash ...Middle East

FINDING the right savings account is tricky – but there’s one account that we all need to watch out or it could cost you hundreds of pounds.

Personal finance journalist Ruth Jackson-Kirby has been writing about savings for 20 years – here she reveals the four questions to ask yourself before you apply.

Easy access accounts are important.

Experts say you should have at least two months’ worth of salary saved in case of an emergency and you need to be able to access this cash without paying a fee or comprising the amount of interest you’ll earn.

However, many of these so-called easy access accounts come with string attached and if you fall for the wrong one it could cost you hundreds of pounds.

You need to avoid any account that has limits on how often you can withdraw cash, if the rates drops after a few months or if there are hefty minimum amounts to open an account.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The easy access accounts with the highest rates come with strings attached.

“If they suit your needs, there’s nothing to worry about, but you need to go in with your eyes open and check the small print before you apply.

“The key is to make these accounts work for you, rather than falling foul of the small print and paying a horrible price.”

I checked the top 10 best-buy easy access savings accounts and found only two that truly offered easy access to a top interest rate. 

The rest came with catches. Break the rules and you could lose out on interest. 

The account worth applying for 

The good news is you don’t have to jump through hoops to get a decent interest rate.

There are still accounts out there that are easy-access, it’s just important to not get duped by dud ones. 

Charter Savings Bank’s Easy Access account ticks all the boxes.

It pays 4.46% with no bonus rate, no linked account, no minimum balance and, best of all, you can access your money as often as you like.

For example, if you save £1,000 in this account over the course of 12 months, you’ll earn £44.60 in interest.

The accounts with traps

Sidekick is currently leading the way with the highest easy access rate, offering 4.76% through its High Yield Cash Reserve account.

Although the account boasts no withdrawal restrictions, savers must maintain a minimum balance of £5,000 to start earning interest.

This threshold is, for most, higher than the amount most major banks suggest for an emergency fund, which typically covers three months’ worth of essential expenses.

Meanwhile, Atom Bank’s Instant Saver Reward pays 4.75% but make a withdrawal in any given month and your rate will fall to 2.5%.

For example, if you deposit £1,000 and withdraw £100 in January, May, and September, your interest rate will drop to 2.5% for those three months.

As a result, you’d earn less interest during those months compared to the usual 4.75%.

Over the year, these three withdrawals would cost you roughly £13.18 in lost interest.

Monument Bank’s Limited Access Saver pays 4.75% but make more than three withdrawals and it drops to 4.25%.

Other deals seem great until you see that you need a £25,000 minimum to open the account.

I’ve also seen lots of short-term bonus rates. 

This when they offer an initially high interest rate, only for it to end after a few months. 

“The problem is they are advertising the rate as an AER (annual equivalent rate) when the headline rate is not the same thing,” says Anna Bowes, from financial adviser firm The Private Office.

“The AER is supposed to help savers compare how much they can earn over 12 months – so taking into consideration any short-term bonus.”

Take Chase Bank’s saver account which advertises a rate of 4.75% AER, including a 1.75% six-month bonus.

Then the interest falls to 3%, meaning the actual AER is just 3.88%. 

If you put in £5,000 expecting a 4.75% return, you’d earn nearly £50 less than expected.

The four questions to ask and avoid dud accounts 

If you are on the hunt for a new savings account, you can no longer assume that the top of the table easy access savings account will give you the best rate. Here’s what you need to check.

Firstly, Is there a bonus rate? If there is, will you remember to move your money when it ends? If the answer’s no, then avoid it.

Now check this. What are the rules on withdrawals? I must admit I snapped up a good rate that limits me to four withdrawals a year.

But I use it for our holiday money so I know I can plan and stick within the limit to keep the good rate.

Thirdly. Do you need a linked account? If you’re not switching your current account, it may not be worth the hassle. Although some linked deals offer both a decent savings rate and better current account perks.

When I was looking for a new bills account Santander offered tempting cashback, and I now enjoy a 6% interest rate on a linked savings account. Although it falls to 4% after 12 months.

And finally. Is it app-only? Make sure you are signing up for an account you’ll be able to use.

Ultimately, easy access savings accounts are often anything but easy. 

How to find the best savings account

The best account for you depends on how you plan to use it.

“Super-keen rate chasers can benefit from short-term bonuses,” says Sarah Coles, head of personal finance at Hargreaves Lansdown. “Someone using a limited access account for a couple of very specific expenses over the coming year can get a better rate into the bargain. 

“Be honest with yourself and pick the kind of account that suits you best.”

You can use a comparison site such as MoneyFacts or MoneySupermarket to find a table of the best rates. You then just need to check the small print to find the best rate which suits how you will use the account.

Want a rate that won’t vanish? “The only answer to this is to fix,” says James Blower, the Savings Guru. “All easy access rates can be changed.”

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