Savings rates rising but ‘easy access’ increasingly limited

Interest rates for savings accounts are finally beginning to rise, says an independent financial information website. However, so called easy access accounts are, in fact, becoming less easy to access.

According to new research by Moneyfacts, average interest rates on the most popular ten savings accounts has risen to 1.49 per cent, up from 1.39 per cent twelve months ago.

But Moneyfacts found that some of the providers of these savings accounts are limiting their customers’ access to their money. Some limit savers to withdrawing their money just three times a year.

Moneyfacts suggests that these providers are investigated by the Financial Conduct Authority, (FCA).

Financial expert at Moneyfacts, Charlotte Nelson, said that the small rate increase ‘restores hope’ to savers but that many savers will be disappointed to see that their providers are limiting the number of times they can withdraw their own funds. Virgin Money, for example, only allows savers to take out their savings three times during a twelve month period as does Chelsea Building Society. The Nationwide permits five withdrawals per year.

The FCA found earlier this year that moving savings from one provider to another can be difficult and that only 20 per cent of easy access savings accounts had been switched from one provider to another during the previous twelve months.

In its report published in January of this year, the financial watchdog said that savers should be given more information and that the process of moving their money from one savings provider to another should be more straightforward. It proposed a series of measures to make switching savings accounts easier and to force providers to state their interest rates clearly in summary boxes on statements. The FCA will also publish details of firms offering the lowest interest rates on its own website.