If you’re not interested in locking your cash away for a couple of years then make sure you check out the Moneymagpie guide to online savings and instant access savings accounts. You can find the right account for your needs, with the best rates around.
If you’re aged 50 or over… you should check out Saga’s Internet Saver account. It’s easy-access – and as most notice accounts aren’t paying much more than many easy-access accounts at the moment, why tie up your money? It pays good rates of interest, offering 2.75% AER including a 0.8% bonus payable for a year.
Sainsbury’s Easy Access Saver
An online savings account is a savings account that can only be dealt with via the World Wide Web, and is sometimes described as an easy access account (although don’t confuse that with instant access).
You have all the features of an ordinary savings account – such as checking your balance and transferring money etc – but you don’t have the option of going into the branch to withdraw real cash. Generally, you can deposit and withdraw as much as you like, whenever you want, but bear in mind you may lose your interest if you withdraw money. For example, some accounts take away all the interest you would have made for the whole month in which you withdraw the money.
There are regular online savers too, which require regular monthly payments – so it’s important to check the terms of whichever account you open. Online savers are useful if you do all your banking online anyway. That way it’s easy to keep track of all your accounts. In addition, because the bank or building society doesn’t have the added costs of manning the phones and staffing their branches with more workers, they can sometimes offer you a better rate than other types of account with similar terms and conditions.
An online savings account can’t be ‘instant access’, because although you can access your money at any time online, you will have to transfer it to a separate account to withdraw it. This could take a few days depending on the circumstances.
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There are three types of online savings accounts:
No notice online savings accounts: these generally don’t require any notice for you to transfer money from the account (remember, it’s online, so you can’t withdraw cash from a branch), and shouldn’t penalise you through loss of interest if you do. Do check the small print when you apply however, because there may be a catch somewhere.
Notice online savings accounts: these often penalise you if you withdraw money from the account without giving them a set amount of notice (which will be stipulated in the terms). With this type of account, there’s a possibility of your losing your interest if you don’t give them sufficient notice. Be careful with these accounts – the whole ‘notice period and loss of interest’ aspect of things is often only mentioned in the small print.
Monthly interest online savings accounts: these can either be notice or no notice, and simply means you receive your interest monthly, rather than annually, or after a given amount of time.
An instant access savings account is the most flexible type of account. You can deposit and withdraw money as the mood takes you.
Savings accounts advertised as ‘instant access’ may still incur a penalty such as loss of interest for the month you withdraw the money in. But many don’t, so you’ll need to check this.
All instant access savings accounts should offer a cash withdrawal facility, either in branch or with a cash card.
Most also offer an online banking service, along with a phone number to call – but this will depend on the package offered by individual institutions.
The only real difference between online savers and instant access savings accounts is the way you access them.
As with any other financial product, the right account for you will depend on your individual circumstances, and you’ll need to check the small print on any account you’re thinking of applying for.
Unless for some reason you’re desperate to be able to withdraw cash or you’re a complete technophobe, it’s probably a good idea to go for an online savings account.
This is purely because online savers often (though not always) offer the best rates. With the internet pretty much taking over all things consumer-based, there is also a much better selection of accounts on offer. Finally, they’re very easy to manage at any time of the day or night.
If you’re searching comparison sites (like Moneymagpie’s best buy tables), both types of accounts will be grouped together under a title like ‘easy access accounts’ – because they’re so similar.