Sainsbury's Internet Saver offers 5% without withdrawal penalties

Over 13 million people claim to have £165 billion worth of savings in accounts that impose penalties if withdrawals are made, according to research from Sainsbury's Finance. In addition to this, 5.86 million people claim to have money in these types of accounts but don't know how much.

Sainsbury's analysis of the top 50 instant access/easy access savings accounts today reveals that around a quarter of them (24%) restrict the number of withdrawals that can be made, and 8% apply a penalty for making a withdrawal.

The Bank's research further reveals that on some of the best-buy instant/easy access savings accounts, making a withdrawal would mean that you would not receive any interest for your entire balance for that month. If someone had £10,000 in such an account paying 6.5% AER interest but made one withdrawal a month over four months, their annual equivalent rate of interest (AER) would fall to 4.33%. This would mean that they would lose £217 in gross interest over the year.

Despite this, 17 million people claim they have made withdrawals worth at least £46 billion from these accounts during the past 12 months, with over 3.1 million people saying they have withdrawn more than £1000. Sainsbury's Savings is urging savers to think about their likely savings transactions and if they do require access to their funds to switch to an account that will not penalise them for doing so.

Helen Cook, Head of Savings at Sainsbury's Finance said: "There are a number of accounts that offer a very attractive rate of return provided you don't make a withdrawal. If you don't need to access your savings, these accounts can be very attractive, but if you have to take money out the rate of interest you receive can fall substantially.

"Given the rising cost of living and economic difficulties, it may be worth moving your savings to an account without penalties if you think you may have to access your savings."

Sainsbury's Internet Saver offers a competitive rate of 5.0% on balances of £1 without any restrictions or penalties for making withdrawals.

On an age basis, 23% of those people with savings accounts that penalise you if you make a withdrawal are aged 65 and over. This is followed by 19% who are aged between 35 and 44.

On a location basis, more people in the North have made withdrawals from these accounts than anywhere else over the past 12 months, with over 2.8 million people claiming to have done so. However, the largest amount of money withdrawn is in Wales & the South West, with £13 billion having been withdrawn from these savings accounts by people in this area.

Since its launch in January 2005 Sainsbury's Internet Saver has consistently paid a competitive rate, and was ranked number one savings account by Moneyfacts in its new 36-month consistency rakings, which tracks the rates paid by savings accounts for the past three-years.

This award is backed up by analysis by Defaqto that reveals that Sainsbury's Internet Saver is the only instant or easy access savings account generally available to adults that has consistently paid a gross AER interest rate on a balance of £1 that is equal to or above the Bank of England base rate in each and every month since January 2005.

Sainsbury's Finance has its own banking licence, is separately regulated by the Financial Services Authority and has an independent membership to the Financial Services Compensation Scheme.