Chorley Building Society this week launched an “easy access” account paying a market-leading rate of 5.3 per cent.
But there’s one big problem: savers who open this account will be limited to a single withdrawal every 12 months, making it the strictest “easy” access product This is Money has ever reported on.
Some of the best easy access offers launched recently come with this warning, be it one, two or three withdrawal limits.
Coventry Building Society launched an easy-access account that pays a top rate of 5.2 per cent, but savers can only make three withdrawals in a 12-month period – although that seems generous compared to Chorley.
Providers have been launching market-leading easy access offers, but imposing withdrawal restrictions, excluding some savers from these offers.
As a result, savers who need to access their cash more frequently are left out of some of the best easy-access deals on the market.
Easy Access Isas have followed this trend, with some of the best accounts being subject to some form of withdrawal restriction or built-in bonus element.
For example, Coventry Building Society’s Four Access Isa, which pays a rate of 5.05 per cent, and Skipton Building Society’s Cash Isa, which pays 5 per cent interest.
There are no specific rules about what is considered “easy access.” As long as an account offers at least one withdrawal, it can be considered an easy access account.
James Blower, founder of Savings Guru, says: ‘The rules really revolved around what constitutes an “instant access” account. This used to mean that you could get your money instantly by withdrawing it in cash.
‘So the new banks adopted names like easy access, no notice, etc. to solve this problem.
“The term ‘easy access’ is now mainly used on comparison sites to group all of these accounts into one group for comparison purposes.”
Why do providers do this?
Many savers see providers launching easy-access Best Buy accounts but imposing restrictions on the number of withdrawals they can make as another way to grab savers’ cash and hold onto it.
Blower says: ‘The banks that top the easy-access tables are trying to attract customers who don’t access their money too often.
‘They are offering higher rates but restricting access in the hope of attracting savers who will simply put their money in but not touch it very often or at all.
Asked if providers are trying to hold on to savers’ money by applying withdrawal limits to easy-access accounts, Blower replies: “Yes. Chorley and Coventry are looking for people who are going to deposit a lump sum that they want to keep access, but largely left alone. They don’t want people coming in and out of money on a regular basis.
While Andrew Hagger, founder of MoneyComms says: ‘By limiting withdrawals, money becomes stickier, meaning less likely to run out of funds all at once.
“Suppliers are willing to pay a higher rate for this rigidity because it is easier for them to control their overall savings book.”
‘Just one step away from a fixed rate bond’
In the case of Chorley Building Society’s 5.3 per cent easy access account, where only one withdrawal is allowed every 12 months, this has more in common with a fixed rate account than an easy access account. So why not fix it for a year and get a better rate?
Hagger says: “It is difficult to justify why a single withdrawal account should be classed as easy access; it could be seen as just a step away from a fixed rate bond.”
At the moment, the best one-year fixed rate bond pays 6.11 per cent interest and is offered by Union Bank of India.
Blower advises: ‘I think the key thing savers should consider here is ‘might I want access to my money?’ If the answer is “maybe”, the Union Bank of India account will not allow it.
“But this is a big rate offset, so I would say to savers to think carefully about access – if you want to, then put some money away in an easy-to-access account.”
“If they have, say, £20,000, then putting £10,000 in an Ulster Bank easy access account paying 5.2 per cent without restrictions and £10,000 in Union Bank for a year will give them a return of 5.65 per cent, but this way they can access half of their money.
What do savings experts think?
Savings Guru does not include single access accounts on its easy access best buys list.
Blower says: ‘We believe they are being used to gain table position and are not an easily accessible account.
“We included those with two or more withdrawals – at one point we didn’t, but we found some savers wanted them and were willing to trade access for a higher rate.”
Andrew Hagger is a little more relaxed about allowing three or four withdrawals, but says: “Even these are a little questionable when comparing apples to apples, but both products reward the customer with market-leading rates.”
‘In my own tables I include Coventry Isa and easy access accounts as the account titles make the limitations very clear.
‘The first thing is that it should be clear from the account title that there are limit restrictions and to be fair I think most examples do this.
“It also depends on how a particular saver uses their money – they may have a cash savings portfolio consisting of a fixed rate bond, a fully unrestricted easy access account and a limited access account – just to earn some interest. extra, although flexibility is necessary. questionable.’
This is Money has contacted Chorley Building Society for comment.
Some links in this article may be affiliate links. If you click on them, we may earn a small commission. That helps us fund This Is Money and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.
