Savings account penalty warning

Published:
28 August 2008
Topic:
News,Money,Savings

Savers are being warned that by putting their money into instant and easy access accounts they may not be able to get their hands on their cash as easily as they thought.

According to market analyst Defaqto, out of 50 accounts paying the top rates, 30% of them limit the number of withdrawals consumers can make and may impose penalties.

Their figures show that in the past two years the number of instant access savings accounts paying more than the Bank of England base rate has tripled.

But it found that consumers have to withdraw at least £100 every time they access their money, with 22% of savings accounts having minimum withdrawal restrictions.

Introductory bonus rates were added in approximately 36% of the savings accounts, although this meant that returns may not be so competitive once the special rate period ends.

Defaqto said that people who deposit £5,000 into instant or easy access accounts are currently paid at least 5% by just over 28% of accounts, which is up from last year's figure.

David Black, principal consultant of banking at Defaqto, say: "These accounts may suit some but will also result in many savers not achieving the advertised rate if they fall foul of the withdrawal restrictions."

Copyright © PA Business 2008

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