Our recent research shows that UK savers are missing out on an estimated
£9.4billion in interest - simply because they haven't checked their savings rates. So it's more important than ever to take action and ensure your money is working as hard as possible for you.
Which is why Santander's latest move came as a breath of fresh air to savers last week when it increased the rate it pays on the e-Saver 2 internet account for both new and existing customers.
What's the deal?
Santander's e-Saver easy access account now pays a competitive 2.75% on a minimum investment of £1. That's an increase from 2.50% previously and puts this deal firmly within the top five.
There are no restrictions on the number of withdrawals you can make on this easy access account, so long as the balance remains above £1.
However, it is an internet-based account, so you can only manage your money online, although you can also make withdrawals using a cash machine.
Any catches?
The e-Saver's rate is bolstered by a 12-month 2.25% variable bonus, after which it will fall to just 0.50%.
Unlike many of its competitors, the bonus isn't fixed, so it could potentially fall during the year. However, it can also clearly rise - as existing customers are now benefiting from the new higher rate.
It is definitely worth switching after the first year, though. Many accounts now boost their rates with a year-long bonus, relying on apathy to keep their customers. The best way to beat that is to switch to another top deal once the bonus period ends.
Verdict
This is a really competitive easy access account and is great for anyone who wants a web-based account with no restrictions on withdrawals.
However, although it is competitive, it doesn't top the best buy tables. The top-paying easy access account available at the moment is the AA Internet Extra Issue 3, at 2.80%. That account can only be managed online, though, so you can't access your cash on the go.
There are several other easy access accounts paying 2.75% and some of these don't rely on a 12-month bonus. For example, the ING Direct savings account can be managed online or by phone, and pays a variable rate of 2.75% with no bonus.
Other deals pay a fixed rather than variable bonus but, as we've seen, a variable bonus won't necessarily fall - it can mean your rate increases.
Top tip
If you want to earn a better rate on your savings, it's worth considering whether or not you could manage without access to the money for a fixed period.
Fixed rate bonds require you to lock your money away for a set time - usually between one and five years.
But they pay top rates. For example, the Bank of Baroda's MAX one-year fixed rate bond pays 3.15%, while, from today (Monday August 2, 2010), the Santander 15-month fixed rate bond will pay 3.00%.
If you're willing to invest for even longer, the Bank of Baroda's MAX five-year bond pays a market-beating 4.90%, although not everyone will be comfortable locking their money away for that long. There's also a risk that rates will rise elsewhere during that time and you'll be stuck with an uncompetitive deal.
Although they pay some of the best rates going, you usually lose all access to your cash. If you have a lump sum you don't need for a while, though, it's a great way to make more from your money.
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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