Investec, the investment and wealth management firm has launched a new instant access account, the Online Flexi Saver. The Online Flexi Saver offers unlimited deposits and withdrawals, a competitive interest rate and no bonus or introductory rate, so savers have complete transparency over their interest rate.
Interest is 0.55% AER on balances between £5,000 and £250,000. Clients can make as many deposits and withdrawals as they like, whenever they want to, with no fees or penalties, no bonus or introductory rate. Interest is paid on a monthly basis, and opening an account is quick and easy to do as Investec is using some of the latest technology to provide a slick application process.
Investec says its research reveals 45% of people with savings accounts believe they will be more likely to manage them online using digital services than they were before covid-19. Of those people who have opened a savings account this year, 79% chose a digital/online based one.
Anna Bowes, co-founder of Savings Champion said: This is a straightforward simple easy access account but there are a number of other easy access accounts paying more – some are paying as much as 0.80% although these have a restricted number of easy access withdrawals allowed each year. As things stand today, the best simple easy access accounts that is similar is with Atom Bank and is paying 0.75%.
“The minimum of the account is also quite high at £5,000 so it’s not be appropriate for those with smaller balances. The Minimum deposit on the Atom Bank Instant Saver is £1.”
The table below shows that one other account from Leeds Building Society also has a minimum opening deposit of £5,000 and pays 0,8% interest, while Yorkshire Building Society offers the same but only requires and opening balance of £100.
Easy Access Accounts – Best Buys from Savings Champion
|Provider||Leeds Building Society||Yorkshire Building Society||Gatehouse Bank||Atom Bank||Kent Reliance|
|Name of account||Double Access Saver||Annual Access Account Issue 5||Easy Access Account||Instant Saver||Easy access savings account Issue 40|
|Gross Interest Rate||0.8%||0.8%||0.75%||0.75%||0.70%|
|Minimum opening balance||£5000||£100||£1||£1||£1,000|
|Account summary||Account holders are limited to two easy access withdrawals per calendar year, subject to the minimum balance of £5,000 being maintained. If this number of withdrawals (including closure of the account) is exceeded, each further withdrawal will be subject to 30 days’ loss of interest on the withdrawn/transferred. Interest is paid on 31 March each year.||The Annual Access Account account allows withdrawals from your account, without losing any interest, on any one day per year based on the anniversary of account opening. Interest is paid annually.||Easy access. In order to comply with Sharia Law the rates listed are an expected profit rate. Expected profit paid annually. Profit must be paid to a nominated account, it cannot be added to the account.||Easy Access. Account is applied for through the provider's app, available in the Apple App store or Google Play store. Interest is paid annually or monthly.||Easy access. Interest is paid on the 5th of April each year or monthly on the last working day of each month.|
Source: Savings Champion
More people are saving
Despite income issues for many September saw higher deposits into instant access accounts according to Bank of England Money and Credit statistics. In September there was an increase in households’ deposits of £6.8bn, below the average of £17.3bn between March and June but higher than the £5.5bn August figure and the £5bn average in the six months to February 2020.
The Bank of England summary stated that “the strong flow of deposits in September can be accounted for by deposits into instant access accounts.”
However, interest rates are clearly not the reason savers are saving. The Bank’s statement also said: “The interest rates paid on individuals’ deposits fell further in September. The effective interest rate on new time deposits fell 4 basis points to a new series low of 0.46%, 58 basis points lower than in February. The effective rates on the outstanding stock of both sight (that which can be withdrawn immediately without penalty) and time deposits (ie those that cannot be withdrawn before a set date or for which notice of withdrawal is required) were broadly flat, both falling 1 basis point to 0.13% and 0.56%, respectively. The rate on the stock of sight deposits is the lowest since the series began in 2016, and 33 basis points lower than in February.
Becky O’Connor, head of pensions and savings for interactive investor, said: “For those earning normally, the covid-19 pandemic has presented both an opportunity and a strong motivation to boost emergency savings buffers.
“The Bank of England deposits data suggests that people were making hay while the sun was shining and their normal spending levels remained subdued.
“Savers took to heart the usual guidance to keep cash ready to go in instant access accounts and because of spending reductions, were able to divert more money into savings accounts than normal.
“Despite ultra-low interest rates, there are benefits to keeping some cash in an instant access account for unexpected emergencies or hard times, as the pandemic has so painfully demonstrated through the sudden loss of income of millions of workers. However, savers should take care not to keep more in low interest accounts than they need, as it can be eroded by inflation.
“For those who want to make a long-term return on their non-emergency money, then investing via an ISA or pension is worth considering.”
The scene is not great for savers now and still, there are mutterings of negative interest rates which would decimate their returns even more.
Myron Jobson, personal finance campaigner, interactive investor, says: “Many Brits have been fortunate enough to save a significant amount in travel and entertainment costs during months of full lockdown and bolster the amount they squirrel away into a savings account as a result.
“However, with savings rates as low as a pitiful 0.01%, adding just 10p on an initial deposit of £1,000 in the first year where interest is applied annually, there is very little reward for this diligent behaviour. And things can go from bad to worse for savers with whispers of negative interest rates.
“There has been little carrot for savers in recent history, as rates have languished since the base rate was first lowered to help stimulate economic growth following the financial crisis. Savers had already been buffeted by two rate cuts in March this year, and any further reduction would rub salt in the wound.”
Further reading: Best savings products and providers highlighted