Take no notice this instant

By HELEN LOVELESS, MAIL ON SUNDAY ENTERPRISE EDITOR
Updated:

 

THOUSANDS of people with notice savings accounts would be better off putting their money into easy access accounts, a new report has claimed.

The research by internet bank Egg revealed 18 out of 20 of the UK's largest banks paid a higher rate of interest on instant access accounts than on accounts that forced savers to wait before withdrawing their cash.

The average interest on a 30-day notice account, across all UK notice accounts, was 2.19%. This rose to an average of 2.5% on 120-day notice accounts.

Yet the average easy access account rate across the top 20 savings providers was 3.24% - a difference of 0.74%.

Despite this, the majority of us still believe we should choose notice accounts to make the most of savings. A separate survey commissioned by Egg found three out of four people 'assumed' sacrificing access was key to a better rate.

Mark Nancarrow, chief operating officer at Egg, said:'Some banks and building societies encourage consumers to believe that waiting to access their savings is rather like wine - the longer they are prepared to wait, the greater the reward. Sadly on many occasions this is not the case.'

Banks paying higher rates on easy access accounts than notice accounts include Alliance & Leicester, whose 30-day Notice Direct account pays 2.7%. Their Easy Saver no notice account pays 3%.

Bradford & Bingley's 60-Day Plus account has an interest rate of 1.5%, compared to a rate of 2.7% on the instant access Premier Saver account.

And Lloyds TSB pays just 1.2% on its 90-Day Notice Account, but a healthy 3.75% on its Online Saver no notice account.

But there are better options. Scarborough Building Society's instant access One Plus Saver accounts pays 4.15% gross on balances of £1+. The ING Direct account is also no notice and pays interest of 4.02% gross.

While Egg's no-notice Internet Savings account has a payrate of 3.5% gross and is guaranteed to at least match the Bank of England base rate until the end of 2007.

An exception is Manchester Building Society's Classic Four 90-day notice account. It pays 4.35% - but you will need a minimum deposit of £2,500.

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