Easy access savings market hots up

Easy access savings accounts have been the poor relation for some time now, with providers having been focusing on fixed rates and Cash ISAs this year, according to moneysupermarket.com.

But the battle for new savings customers has moved to the easy access market, with a number of new launches and rate increases having been seen in recent weeks.

Coventry Building Society and Alliance & Leicester have both launched new easy access accounts today. Coventry's eSave account, available to the over-50s is paying a market-leading rate of 3.25 per cent. Unlimited penalty-free withdrawals are allowed although the rate is fixed for 12-months. A&L's Online Saver Issue 5 is a variable rate deal, as are most easy access accounts, paying 3.15%.

Five other easy access accounts have launched in the past three weeks while another five providers have increased the rates offered on existing easy access accounts.

Kevin Mountford, head of banking at moneysupermarket.com, said: "This level of activity is unusual given the Bank of England base rate hasn't changed since March. But it's great news for savers, particularly those who don't have money they can afford to lock away in a fixed rate account.

"Providers are still desperate for our cash so the competition is likely to remain strong for some time to come. Until the last few weeks, banks and building societies had focused on fixed rates and Cash ISAs, with these products the most searched for on moneysupermarket.com but the tide is now turning.

"It's incredible to see easy access accounts with rates more than 2.5 per cent higher than the base rate and savers really should be looking to take advantage.

"There are features you need to watch out for though such as introductory bonuses and withdrawal restrictions - make sure you're aware of these, and in the case of bonuses, be prepared to move your money again once the introductory period ends."