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August 28, 2008

Rates rise on easy-access savings

by Gill Montia

Story link: Rates rise on easy-access savings

Financial data firm, Defaqto, has found that interest rates on easy-access savings accounts have been rising.

According to a recent survey by the analyst, 28% of easy-access accounts currently on offer are paying interest at above the Bank of England’s base rate (5%).

By comparison, in 2007, 21% of such accounts offered an above base rate return, while in 2006, the figure stood at just 8%.

Since the onset of the credit crisis, many savings account providers have turned to retail deposits in efforts to shore up their balance sheets and reduce their dependency on the money markets.

This has led to strong competition on the High Street, although some of the headline rates revert to a lower rate after an initial period.

Defaqto found that around 36% offer a bonus rate for new customers, no doubt in the hope that savers will not take the trouble to review their choice once the bonus period has expired.

In addition not all easy-access account are as accommodating as the name suggests, many have restrictions on cash withdrawals.

In a review of 50 instant or easy-access accounts with high rates, Defaqto found 15 that limited the number of withdrawals or imposed penalties on some withdrawals.

 

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