Nearly half of UK households say that they would struggle to cope if their monthly outgoings rose by £99. We look at how you can create some financial 'breathing space' to help you out if you lose your job or become ill.
Interest rates plummet on easy access accounts
Interest rates plummet on easy access accounts
Interest rates plummet on easy access accounts
With interest rates still sliding downwards on easy access accounts, what options do savers still have?
Savers are being hit from every angle at the moment. As if rising inflation and a rock bottom base rate wasn't enough, the latest attack has sent interest rates on easy access accounts plunging downwards.
Getting instant access to your money, while earning interest on it, is a good option as you’re not locking it away but you’re still earning more than if you were to keep it in your current account.
Falling interest rates
However, the rates have been slowly creeping downwards. The average rate for a standard easy access account is now is 1.05%, a fall from 1.09% a month ago, according to Moneyfacts.co.uk.
Several providers - including ING Direct, Nationwide Building Society, Santander, Derbyshire Building Society and Post Office - have recently withdrawn easy access accounts and launched new issues, with lower rates.
Interest rate changes in the last month
Account * | Interest rate in August 2012 | Interest rate in September 2012 | Difference |
3.20% | 2.80% | -0.40% | |
3.06% | 2.80% | -0.26% | |
3.00% | 2.80% | -0.20% | |
3.06% | 2.90% | -0.16% | |
3.02% | 2.86% | -0.16% | |
3.05% | 2.90% | -0.15% | |
3.01% | 2.95% | -0.06% |
*source: Moneyfacts.co.uk
So what is on offer in the instant access market?
Despite the recent downward spiral, you’ve still got quite a lot of choice when it comes to savings accounts, although the rates on offer are pretty pitiful.
As you have unlimited deposits and withdrawals from these accounts, the interest is lower than you would get from an account with a longer term.
A one-year fixed rate account or a notice account would both give you more interest, but there are restrictions on the number of withdrawals and deposits.
The best accounts with a bonus
[SPOTLIGHT]Top of the table for instant access accounts with a bonus is the West Brom which pays 3.06%, with a bonus of 1.54%. However, this also has a minimum opening deposit of £10,000 which is quite a large amount to keep in an instant access account.
Next after the West Brom comes Post Office with a 2.95% account (and 1.30% bonus) which you can open with £1, which means it will likely suit more people.
With bonus-paying accounts, remember to keep an eye on when the bonus ends and be prepared to switch your money over at this point to an account with a higher rate of interest.
Top five instant-access accounts with a bonus
Provider | Rate | Minimum deposit | Access | Bonus |
The West Brom direct Bonus Account 5 | 3.06% | £10,000 | Phone and post | 1.54% until 30 September 2013 |
Post Office Online Saver | 2.95% | £1 | Online | 1.30% for the first 12 months |
2.90% | £1,000 | Online | 1.90% until 31 January 2014 | |
2.90% | £1 | Online and phone | 2.45% for the first 12 months | |
2.90% | £1,000 | Online | 1.36% for the first 12 months |
The best accounts with no bonus
If you want a decent account which you’re not going to have to monitor every year, go for one without a bonus. The rates aren’t as good but you’ll have the peace of mind of getting a regular interest rate which isn’t going to change.
Again in this table the top two accounts paying 2.80% ask for a whopping great sum of £25,000 to open the account. If you haven’t got this kind of money, or aren’t happy keeping it in an account like this, go for something like the Aldermore account paying 2.75% or that from Virgin which pays 2.60% but only asks for £1 when you open it.
Top five instant-access accounts with no bonus
Account | Rate | Minimum deposit | Access |
Shepshed BS Postal Account | 2.80% | £25,000 | Postal |
Teachers BS Smart Saver | 2.80% | £25,000 | Postal |
Aldermore Easy Access Issue 2 | 2.75% | £1,000 | Online, post, phone |
Leeds BS Postal Account Issue 2 | 2.75% | £1,000 | Online, post |
2.60% | £1 | Online, branch, post, phone |
More on savings:
One in five has no pension savings
Savers could win £1 million with Halifax
Get a better rate on your savings by stashing your cash offshore
related stories on msn
0Comments
latest money videos
more on msn money
Avoid these mistakes if you want to lead a richer life!
Save regularly to nab a leading easy access ISA rate from Newcastle Building Society and the chance to earn up to £1,000 cashback.
Barclaycard is now offering a record 27 interest-free months to pay off your debts.
The taxman says three and a half million people are due a refund, but two million will have to fork out for underpaid tax.
Fed up with low savings rates and high borrowing rates? As Dave Fishwick and his Bank of Dave has demonstrated, there are other options out there.
If you want to find a unique property bargain, there is plenty of help available online - you just need to know where to look.
US couple have found an innovative solution to the problem of sky-high house prices.
The two banks have now joined the Post Office's banking network, meaning customers can make withdrawals and deposits at branches around the UK.
Get 5p off per litre of fuel at Shell, broadband from £2 a month and more in our latest discount and freebie round-up.
Lifestyling is supposed to mean that your pension pot becomes more secure the nearer you get to retirement. Yet your pension provider might be switching you to overpriced and therefore riskier investments.
If you want to borrow a larger sum of money and repay it over time, a conventional personal loan is not always your best option.
