They may not have the name recognition of big banks, but savers may want to take a second look at small, local building societies when looking for the best interest rates.
They currently have some of the highest paying accounts on the market. in particular Buckinghamshire Building Society offers the best buy easy-access rate of 2.9 per cent on balances up to £500,000.
And a number of other smaller mutuals offer best-buy notification accounts.
Be quick: Smaller mortgage banks including Mansfield (pictured) offer some of the best rates on the market, but experts warn some of these deals won’t last long
These deals allow savers to withdraw their money after a notice period, usually between 30 and 180 days, but can offer savers better returns than they would otherwise get from an easily accessible account.
But while the rates are undeniably good, savers may be missing out on some of the services they expect from big banks, especially online banking.
While some smaller mortgage banks offer it, many do not and some will require customers to visit branches or communicate by phone or mail.
We look at the savings rates offered by smaller mortgage banks and explain what customers need to know before opening an account with a bank.
– Check out the best easily accessible savings rates here.
Easy access… with a catch
While the overall rates will whet the appetite of any savvy saver currently scanning the market, these deals often have a catch that can make them less attractive.
Buckinghamshire’s 2.9 percent deal is one Single Access Saver meaning that while it is technically easy to access, it only allows one withdrawal per year without penalty.
In fact, a second withdrawal within a calendar year will result in the automatic closure of the account.
It means that this deal is only suitable for someone using the account as an emergency fund, which they only expect to pull out in the worst case scenario.
Best-buy savings agreements with local mortgage banks
Stafford Railway Construction Company pays 3.5 percent to his account with 120 days’ notice and 3 percent to his account with 90 days. This account cannot be managed online.
Mansfield Building Society offers a 3 percent on its 90-day cancellation account, which is only available online. Likewise, it has a 180-day Isa notice with a 3 percent maturity, which can only be accessed and managed in a branch or through the mail.
Hinckley and Rugby Building Society offers a 120-day account and pays 3.2 percent. The account can only be opened and managed in the branch or by mail.
Marsden Building Society also currently offers 180 days notice and pays 3.85 percent and 120 days Isa notice pays 3.4 percent. However, savers will have to go to an office to open both accounts.
There is also the issue of opening and managing the account. It must be opened in person or by mail. Once opened, depositors must register to check their account online or request a transfer.
Savers who think they need more than one cash withdrawal a year can instead sign up with Buckinghamshire’s Triple Access Saver and pay 2.6 percent.
However, savers can get better rates by going to Coventry Building Society and Al Rayan Bank, which pay 2.85 per cent and 2.81 per cent.
What about notice bills?
Stafford Railway Building Society is the smallest of the UK’s 43 building societies, but offers some of the most generous cancellation bills.
The 3.5 percent deal requires 120 days’ notice, so savers should be prepared to take four months to access their funds. Only three withdrawals are allowed per year, which is another factor to consider.
Savers can apply online or open in branch or by mail. While the Stafford account can be opened online, it cannot be managed online – so depositors will have to provide instructions in a branch or by mail.
Savers also require a minimum of £5,000 to open an account, which may be too much of a hurdle for some.
Marsden Building Society also offers 180 days notice and pays 3.85 percent.
However, the account can only be opened and managed in a branch and the minimum amount required to start with is £10,000.
Read the fine print: Many of the deals offered by savings deals from smaller building societies have restrictions, so it’s important to read beyond the general rate
Marsden is also offering a 3.4 percent cash Isa deal with 120 days’ notice for those who want to protect the interest they want to earn from the taxpayer.
This deal has a lower barrier to entry with just £1,000 required to open the account. However, as the name suggests, the account is only available in branches.
There is no rule that says people who open the accounts have to live in the local area, but it will be difficult to manage it in a branch for those outside the Northwest.
Marsden only had eight branches around Burnley and Preston, which will limit the number of people who are close enough or have enough time to go in and open an account with the company and then make any withdrawals.
A spokesperson for the Savings Guru says: “There are some catches with many of the smaller building societies.
“There are currently no geographic restrictions on the best deals, but there are a range of withdrawal limits and other restrictions to be aware of. The main drawbacks for them are the lack of internet banking.
For example, Stafford’s deal cannot be managed online, while Buckinghamshire’s deal can only be opened by mail or branch.
“This is the most important thing to watch out for as the mail strikes are ongoing, there are mail delays and savers could miss out on their interest while they wait for everything to be received and confirmation to be sent in the mail. However, for non-Internet users, they are great rates.
‘The Mansfield Isa account with notice period is really good value, but you have to allow six months for it.
“Since you can get the same rate for easy access just by opening a Virgin Money checking account, it’s probably not worth it.”
Savers who may be interested in these deals are urged to act quickly or risk missing out.
The Savings Guru spokesman added: ‘Stafford is the smallest construction company so I expect that bill to be gone this week and Buckinghamshire isn’t much bigger so again I doubt those rates will even make it through Friday.’
Some links in this article may be affiliate links. If you click on it, we may earn a small commission. That helps us fund This Is Money and use it for free. We do not write articles to promote products. We do not allow any commercial relationship to compromise our editorial independence.