Warning issued for anyone with savings account due to 'hidden' rules

Brits have been urged to check the small print of their easy-access account as they may

The warning comes as some of the "best paying" are not as simple as you believe and can have caveats that can catch out unwary savers.

Easy-access accounts are savings accounts which generally allow you to withdraw money whenever you need it, although some accounts can restrict how many withdrawals you can make in a year. You can deposit as little or as much as you like in these accounts, so they are very popular due to their flexibility.

Andrew Hagger of the financial information website MoneyComms explained how some and building societies use a "bonus element" to boost the overall interest rate on an easy-access saver account "as a way of tricking themselves into the best-buy tables.”

Andrew says this means that at the time you sign up for a deal with a bonus, it may well be competitive. But when that bonus drops away after six or 12 months, it is unlikely to be offering such good value. He added: "“It’s up to you to set a reminder for that time to switch to a better savings deal. The providers are banking on you forgetting to do this, enabling them to profit by paying you a sub-standard rate on your nest egg.”

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According to Andrew, one example of this is Bank's Internet Saver, which advertises that it has an interest rate of 4.4%. However, this isn't the case. It is actually made up of a 3.15% fixed bonus rate for 12 months, on top of the variable standard rate, which sits at 1.25%. So, after a year, the account will only pay 1.25%.

Andrew noted that the Post Office's Money’s Online Saver Issue 75 is similar. The saver is advertised to pay 4.55% AER (annual equivalent rate). However, this includes a 3.10% bonus for 12 months. At that point, it falls to the standard rate, which is now 1.45%.

Another issue for easy-access savers was the limitations on withdrawals. The consumer group Which? analysed data from Moneyfacts and found that half the top 10 market-leading instant-access accounts limit the number of withdrawals you can make before the interest rate falls.

Kevin Mountford, the co-founder of the savings platform Raisin UK, said that while some savings accounts "clearly indicate the limitations in the name", others are not as upfront. He added: "In some cases, accounts that are branded as ‘easy access’ may have hidden limits on withdrawals, only revealed in the fine print." He added: “It’s important to carefully read the terms, or ask your provider directly to avoid any surprises if you need to access your funds more frequently than the account allows.”

Finally, some banks also have a "tier list" for easy-access bank accounts. So the banks offer a different interest rate depending on your balance. However, it does not necessarily mean that the more you save, the better the rate. Some accounts offer the best rates on the first few thousand you save, and then barely anything on higher balances.

Anna Bowes, a co-founder of Savings Champion, explained “For example, the best-paying easy-access account in the market as we speak is Santander Edge Saver Account (Issue 2) paying 6%. But this is only for those who have, or open, an Edge Current Account and this rate is only paid on balances of up to £4,000. Anything above earns no interest, so it would dilute the overall return.”

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