Why do most top easy-access savings accounts paying rates of up to 5.3% now have such stingy withdrawal restrictions?

Chorley Building Society this week launched an ‘easy access’ account with a market-leading rate of 5.3 per cent.

But there’s a big catch: savers who open this account will be limited to just one withdrawal every twelve months, making this the strictest ‘easy’ access product This is Money has ever reported on.

Some of the very best, easy-to-access deals launched recently have this caveat, whether it’s one, two or three withdrawal limits.

Coventry Building Society launched an easy-access account with a top rate of 5.2 per cent, but savers can only make three withdrawals in a twelve-month period – although that looks generous compared to Chorley.

Savers who need to access their money more often are therefore excluded from some of the best, easily accessible deals on the market.

Easy-to-access Isas have followed this trend, with some of the best accounts having some form of withdrawal restriction or a built-in bonus element.

For example, Coventry Building Society’s four Isa, which pays 5.05 per cent interest, and Skipton Building Society’s cash Isa, which pays 5 per cent interest.

There are no specific rules about what qualifies as “easy access.” As long as an account offers at least one withdrawal, it can be considered an easy-to-access account.

James Blower, founder of Savings Guru, says: ‘The rules were really about what constitutes a ‘direct access’ account. Previously, this meant that you could get your money immediately by withdrawing it in cash.

“So new banks have adopted names like easy access, no notice etc to get around this.

‘The term ‘easy access’ is now mainly used by comparison sites to group all those different accounts into one group so that they can be compared with each other.’

Why do providers do this?

Many savers see providers launching the best, easy-to-access accounts but placing limits on the number of withdrawals they can make as just another way to grab and hold savers’ money.

Blower says: ‘The banks at the top of the ease of access rankings are trying to attract customers who don’t access their money as often.

‘They offer higher rates but limit access, hoping to attract savers who simply put their money in but don’t interact with it often or at all.

Asked whether providers are trying to hold onto savers’ money by applying withdrawal limits to easy-to-access accounts, Blower said: ‘Yes. Chorley and Coventry are looking for people to make a lump sum deposit, which they want to keep access to, but largely leave it alone. They don’t want people moving money in and out on a regular basis.”

While Andrew Hagger, founder of MoneyComms, says: ‘Limiting withdrawals makes the money stickier, i.e. the money is less likely to be drained from the account in one go.

‘Providers are willing to pay a higher rate for this persistence because it is easier for them to keep their broader savings account under control.’

‘Just one step away from a fixed rate bond’

In the case of Chorley Building Society’s 5.3 per cent easy access account, where only one withdrawal is allowed every twelve months, this has more in common with a fixed rate account than an easy access account. So why not repair for a year and get a better rate?

Hagger says: ‘It’s hard to justify why a single withdrawal account should be considered easy to access – it could be seen as just one step away from a fixed rate bond.

Currently, the best one-year fixed rate bond pays an interest of 6.11 percent and is offered by Union Bank of India.

Blower advises, “I think the most important thing savers need to consider here is, ‘Can I access my money?’ If the answer is ‘maybe’ then the Union Bank of India account does not allow it.

‘But this is a big trade-off, so I would tell savers to think carefully about access – if that’s what they want, keep some money in an easily accessible account.

‘For example, if they have £20,000, then placing £10,000 into the Ulster Bank easy access account, with an interest rate of 5.2 per cent without caps, and £10,000 into Union Bank, will yield a return of 5.65 per cent, but this way they can do it. have access to half of their money.”

What do savings experts think?

Savings Guru doesn’t list single-access accounts on its easy-to-access Best Buys list.

Blower says: ‘We believe these are used to gain position on tables and are not really an easily accessible account.

‘We include those with two or more withdrawals – we didn’t do that at one point, but we found some savers wanted them and were willing to trade access for a higher rate.’

Andrew Hagger is a little more relaxed where three or four withdrawals are allowed, but he says: ‘Even these are a bit questionable if you want to compare apples to apples – but both products reward the customer with market-leading rates.

‘In my own tables I list the Coventry easy-access and Isa accounts because the account titles make the restrictions crystal clear.

‘The first is that the account title should make it clear that there are limit restrictions and to be honest I think most examples do this.

‘It also depends on how a particular saver uses their money – he or she may have a cash savings portfolio consisting of a fixed-rate bond, a completely unlimited easy-access account and a limited-access account – just to get some to collect extra interest, even though flexibility is a requirement. doubtful.’

This is Money contacted Chorley Building Society for comment.