>
Will this spark a savings rate war? Coventry BS’s new best-buy easy access account pays 0.25% more interest than its closest competitor
- Rate on Coventry’s Limited Access Saver increased from 2.85% to 3.25%
- The rate increase applies to savers who have been connected since 2 December last year
- Most Coventry savings accounts will see interest rates rise
- The move could encourage other providers to increase their rates as well
<!–
<!–
<!–<!–
<!–
<!–
<!–
Coventry Building Society has increased its interest rates for depositors, including the launch of a new best-buy easy access account.
The rate on its Limited Access Saver (6) rises from 2.85 percent to 3.25 percent, meaning it’s 0.25 percentage points higher than This is Money’s independent best-buy savings table.
The account can be opened with just £1 and has a maximum balance of £250,000.
However, as with all savings accounts, only £85,000 per person is covered by the Financial Services Compensation Scheme.
Savings experts believe Coventry’s current move should help raise the bar and lead to further rate hikes for easy access savers.
Coventry’s Limited Access saver rises from 2.85% to 3.25%, meaning it’s now at the top. This is Money’s independent best buy chart
A spokesman for savings consultancy The Savings Guru said: “For savers it is great news that a provider that was already second in the market is increasing its rate so much.
‘Because Coventry is the second largest construction company in the UK, they are big enough to stay at the top of the tables for a while.
This is good news for savers as it will likely force others to react and it is only a matter of time before more easy access rates hit or exceed 3 percent.
“With the Bank of England meeting on February 5 to decide on key interest rates, and the market widely anticipating another rise, we expect easily accessible savings rates to continue rising in the first quarter of 2023.”
What savers need to know before signing up
While the Coventry account allows direct access, there are certain restrictions.
Savers can withdraw money from their account up to six times a year without paying any fees.
From the seventh withdrawal, which may include closing the account, they will receive compensation equal to 50 days interest based on the amount they withdraw.
Someone who deposits £10,000 into the account can expect to earn £325 in interest over 12 months.
Coventry’s new rate will automatically be applied to anyone who has opened the Limited Access Saver (6) since its launch on December 2.
However, savers on previous issues of the account, such as the Limited Access Saver (5), will not receive the same rate increase, although they will likely see some improvement.
Aside from the Limited Access deal, 97 per cent of all savings held at Coventry will be subject to rate increases from today.
This includes a 0.85 percent increase on the regular saver, who will now pay 4 percent. The Junior Cash Isa deal also rises to 3.8 percent.
How does it compare to other savings accounts?
After Coventry’s offer is the next best bill in terms of interest Yorkshire Building Society‘s 3 percent deal – but it’s only available for balances up to £5,000.
Anything over £5,000 earns a 2.5 per cent rate. It also only allows two withdrawals per year, which makes it rather restrictive for anyone hoping to rely on these savings at some point.
Savers could also consider Zopa Bank, which pays 2.86 percent and does not limit savers to a certain number of withdrawals per year.
Savers can also increase their rate to 3.26 percent by holding money longer through a selection of linked cancellation accounts.
Best Place: Coventry Building Society offers the best easy access deal on the market that is open to everyone
Savers with bank accounts at HSBC, Barclays or Santander may also want to take advantage of exclusive, easy-to-access deals.
Barclays banking customers who sign up for the Blue Rewards program can take advantage of an exclusive, easy-to-access savings deal.
The Barclay’s Rainy Day Saver account pays 5.12 per cent interest on balances up to £5,000. That could add up to over £250 in interest after a year.
The downside is that savers have to pay £5 a month to become a Blue Rewards member, but it also comes with other benefits, such as £5 monthly cashback for having two direct debits paid from the bank account.
Exclusive club: Barclays bankers can access a deal and pay 5.12 per cent interest on balances up to £5,000
HSBCs Online bonus savings account is essentially an easy-to-access deal that pays 3 per cent on balances up to £10,000, exclusively for HSBC bank customers.
The downside is that the 3 percent rate only applies to the month in which no money is withdrawn. During a month in which a withdrawal is made or the account is closed, savers earn only 0.5 percent.
This means that depositors who sign up would be wise to think of this account as their emergency fund, rather than day-to-day savings that they can dip in and out of.