Don't neglect your savings this Christmas

06 December 2012

Christmas is always one of the busiest times of the year, but don't forget to keep an eye on what is happening to your savings.

Savings rates have been on the slide for months now with no signs of abating. The rate on the BM Savings ISA Extra account, for example, has plummeted from 2.75% to 1.35% tax-free, while the rate on the AA Postal Access ISA has dropped from 2.70% to 1.50%.

BM Savings, AA and Saga have also all withdrawn their easy access savings accounts without replacing them, so new savers have even fewer options available to them.

With so many changes happening at the moment, it's more important than ever to keep a close eye on your accounts, and to move your money if it could be earning you higher rates of interest elsewhere.

Although traditionally some savings providers put up their rates in the New Year to attract new customers, there are no guarantees and, even if they do, it is unlikely to be by much.

As a result, it's worth making sure your money is working as hard as possible for you now. But you might not want to lock into a fixed rate account in case better deals become available.

So here, we round up the best easy access accounts up for grabs at the moment, whether you want to operate your account online, in branch, by post or by telephone...

Online easy access accounts

Some of the most competitive easy access accounts can only be operated online. The reason rates tend to be higher on online accounts is because there is no paperwork for providers, therefore enabling them to keep overheads to a minimum.

For example, the current market leading easy access account is Issue 8 of the Post Office's Online Saver account, which pays a competitive 2.35% annual equivalent rate (AER) on a minimum investment of £1.

This rate includes a 0.70% fixed bonus for the first 12 months, so you may want to move your money once this disappears. The account can only be opened and operated online.

Similarly, Triodos Bank's Online Saver Plus account, which pays 2.30% and can again be opened with £1, can only be operated online. The rate on this account includes a 1.30% bonus for the first 12 months, so again, you may want to move your money once this goes.

This account won't suit savers who need regular access to their money, as it only allows three penalty-free withdrawals per year.

Alternatively, National Counties' 2nd Issue Online Saver account, pays a variable AER of 2.25%, with no short-term bonus, and can be opened with just £1. This account allows unlimited free withdrawals, although the minimum amount you can take out at any one time is £100.

Other competitive online-only easy access accounts include Nationwide Building Society's MySave Online Plus account and Derbyshire Building Society's NetSaver Issue 8 accounts.

These both pay 2.20% and, in common with many of the top easy access accounts, the rates include a bonus, so you may want to move your money when the bonus period ends.

In Nationwide's case, the bonus is 1.18% for the first 12 months, while the Derbyshire bonus is 1.20% until the end of February 2014. The Nationwide account only allows one penalty-free withdrawal per year.

Branch easy access ISAs

Savers who prefer to operate their accounts in branches rather than online still have several competitive options available to them.

For example, Manchester Building Society's Platinum Instant Issue 6 account can be operated either by post or in branches, and pays a respectable 2.27% AER on a minimum investment of £1,000. Up to 12 withdrawals are allowed in each calendar year, and the maximum amount you can invest in this account is £50,000.

Similarly, West Bromwich Building Society's Branch Easy Access Saver 3 account pays 2.26% AER on a minimum investment of £1,000, and, as the name suggests, this account can only be operated in the building society's branches.

You can only make two penalty-free withdrawals a year and only one account is permitted per customer. One of the big advantages of this account is that it does not include a short-term bonus in the rate, so your returns won't suddenly plummet after a year.

Telephone easy access accounts

If you are looking for an easy access account which you can operate by telephone, then Marks & Spencer's Everyday Savings account pays a best buy 2.35% AER, matching the Post Office Online Saver rate.

This rate includes a 1% bonus which is only payable for the first year. The account can be opened with a minimum investment of £1, and can be operated online as well as by phone.

Another option worth considering is ING Direct's Savings account, which pays 2.00% AER, again on a minimum investment of £1.

This account can be operated by telephone, or online. Bear in mind that this rate includes a hefty 1.48% bonus for the first 12 months, so you will need to move your money at the end of this period.

Postal easy access accounts

The top easy access account if you want to operate your savings by post is the aforementioned Manchester Building Society Platinum Instant Issue 6 account, which can be managed either in branch or by post, and which pays a generous 2.27% AER on a minimum investment of £1,000.

Another option, but paying a much lower rate of interest, is Scottish Widows' Bank Direct Transfer Account 2, which pays 1.70% on a minimum investment of £1,000. Neither of these accounts' rates include a short-term bonus.

Don't forget ISAs

Savers who have yet to make the most of this year's £5,640 cash ISA allowance need to get their skates on, as if you haven't invested before the end of the tax year on April 5, your 2012/13 allowance will be lost for good.

Coventry Building Society's 60-day Notice ISA is currently the market leading variable rate ISA, paying a table-topping 3.10% tax-free on a minimum investment of £1.

However, this rate was 3.25% last week, proving how quickly rates are falling. The rate includes a bonus of 0.60% for the first 12 months, and the account does not accept transfers from existing ISAs. This account can be operated online, by post or telephone, or in branches.

ING Direct's cash ISA, meanwhile, pays 2.50% tax-free on a minimum investment of £1, and can be operated online and by telephone. The rate on this account is guaranteed for 12 months, so you may want to move your money at the end of this period.

Alternatively, Danske Bank's cash ISA pays 2.25% tax-free on a minimum investment of £10. However, you only receive the 2.25% rate of interest during the current tax year.

After that, your money will earn lower tiered rates of interest, so you may want to move your money next April when the new tax year starts. This account can be operated online, by telephone and in branches.

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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About This Author

Melanie Wright


Financial journalist


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