Internet accounts with a catch

Rachel Thrussell, Head of Savings at Moneyfacts.co.uk, comments: “Birmingham Midshires online saver account launched this week pays a respectable 5.89% gross, but there is a catch – if you withdraw any money from this account you lose interest on your entire balance for that month. Also this week Bradford & Bingley has launched issue 4 of its eSavings account. While the rate has increased to 6.01% gross/AER, it does include a 12-month bonus of 0.51%.

“Providers are still competing on rates, but consumers must see through this somewhat overused tactic. An instant access account doesn’t always do what it says on the tin.

“With mortgage and lending margins low, rising bad debts and high competition in the savings market, providers can’t often really afford to pay the headline rates they offer, not at least without putting some form of catch in place.”