Consumers looking to squirrel away the pennies are not only having to contend with low savings rates, but are increasingly facing restrictions on which savings accounts they are eligible for, according to new research.
Comparison site MoneySuperMarket analysed the top 25 cash ISAs and easy-access savings accounts, and found that many providers place restrictions on their offerings, meaning that it is not always possible for consumers to benefit from the best deals.
Cash ISA restrictions
For instance, the four highest-paying cash ISAs all impose a restriction on who can access them:
- Customers looking to open up Coventry Building Society’s market leading Branch Instant ISA, paying 2.00% AER will find they can only open this in a branch.
- First Direct offers 1.70% AER, yet only allows instant access by transfer to another First Direct account.
- Similarly, Monmouthshire Building Society’s Cash ISA 6 and HSBC’s Loyalty ISA are restricted to those in certain geographical locations or those who are already existing customers.
Not so easy-access savings
It’s a similar story for easy-access accounts, with each of the top five accounts being restricted to either existing customers, by geographical location, or to those who can access their branch. The highest rate available to all is 1.40 per cent AER – significantly lower than the market leader which offers 2.10 per cent. From the 16 accounts which are deemed available to all, six still place restrictions on the number of withdrawals that can be made.
Kevin Mountford at MoneySuperMarket, said: “It’s a tough environment for savers, and restrictions on accounts make it even harder for the majority of consumers to benefit from the best rates being advertised. Furthermore, bonus rates are not as popular as they have been in the past, with only a handful of providers offering them.
Take interest in current accounts
So Kevin's advice is to look elsewhere to boost returns: "For many, the return on your money will be much higher in a current account than a standard savings account right now, and it's easier than ever before to switch to a new current account, so this could be a good option for some – for instance, Tesco Bank Current Account offers 3% up to balances of £3,000 (£750 minimum monthly funding) - though tax-free ISAs should still be the first port of call."
Use MoneySuperMarket to compare interest-paying current accounts.
Plus find out how to get a £125 M&S gift card when you switch accounts.