The RCI Bank Freedom Savings Account, which has no restrictions on access, pays a competitive 1.50% AER (variable) . This places the account at the top of the easy access savings tables alongside the BM Savings Online Extra account, which also pays 1.50% AER (variable).
But, while the 1.50% from BM Savings incorporates a fixed bonus of 1.00% for the first 12 months, the Freedom account has no initial bonus rate. This means there’s no need to move your money again when it expires. That said, RCI's rate is still variable so could change at any time.
You can open the Freedom Savings account with a relatively low £100 deposit which also compares favourably to the £1,000 required by BM Savings.
However, if you are planning on investing a lot more than this (around the £70,000 mark) it's important to understand that RCI bank does NOT fall under the Financial Services Compensation Scheme (FSCS), which protects the first £85,000 of your cash if the bank goes bust. You'll find more on this in our 'Watch out for...' section.
Is this for you?
RCI Bank’s Freedom Savings Account is worth considering if:
-You have a deposit of £100 or more
-You want to be able to access your money with no restrictions at all
-You don’t want to worry about a bonus rate expiring
-You have done your homework about the protection that, as a French bank, RCI offers on your cash.
What makes it special?
As well as being one of the most competitively-priced, RCI's Freedom account is entirely 'clean'. With no temporary eye-catching bonus, the rate you see is (albeit variable) the rate you get. In cases where a temporary bonus puts the rate much higher than its nearest competitors, opting for a bonus account can make sense (so long as you are proactive about switching again when it expires). But, in this case, RCI's clean rate is 1.50%, which is the same as BM's bonus-boosted 1.50%.
RCI also imposes no restrictions on access, such as X days’ notice or a limited number of withdrawals you can make in a year. And, unlike many accounts which are internet-only, you can operate the Freedom account both online and on the phone.
Watch out for...
Because RCI is a French bank, your money will not be protected by the UK's Financial Services Compensation Scheme (FSCS). This covers the first £85,000 of savings per person, per banking institution, if your bank or building society goes bust.
Instead, eligible depositors are covered by the French Deposit Guarantee Scheme (Fonds de Garantie des Dépôts et de Résolution or FGDR) which protects up to the sterling equivalent of EUR 100,000 of your cash (again per person, per banking institution).
At the time of writing, EUR 100,000 is equivalent to £71,720 which is considerably less than the £85,000 protection you would get under the FSCS. And, of course, exchange rates vary so your protection could be lower than this.
The FGDR works in a similar way to the FSCS, though. If the bank goes bust, it will step in and compensate savings you have lost up to the respective limit within a maximum of 20 days.
Savers should also be aware that, because this account is not an ISA, tax is payable on the interest you earn. Just like any other bank that is registered in the UK, your interest will be paid with 20% tax deducted. If you are a higher rate taxpayer, you will need to pay the rest through your tax return.
What else is worth a look?
When choosing a savings account, your first port of call should always be a tax-free ISA. This tax year you can shelter up to £15,240. If you have already used up your ISA allowance, why not consider putting your extra savings in a current account? You’ll still be able to access your money and the interest rates are even more competitive.
The TSB Classic Plus Account, for example, pays 5.00% AER (variable) on balances up to £2,000 (you’ll need to pay in at least £500 a month and have at least two direct debits on the account). And, if you apply for your account before June 28, you’ll receive £100 cashback – read more about this offer here.
Alternatively, the Santander 123 account pays 3.00% AER (variable) on balances between £3,000 and £20,000 (or 1.00% on balances above £1,000 and 2.00% on balances above £2,000). You’ll need to pay in £500 or more a month, have at least two direct debits on the account and pay a £2 monthly fee.
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.