Newly launched savings accounts pay more interest on average
Independent financial research company Defaqto has found that the average interest rate paid by newly launched easy access savings accounts and Cash ISAs are significantly higher than for those launched in and before 2010.
Defaqto's research - which looked at savings accounts that are still available to new customers - found that while newly launched easy access savings accounts pay an average of 253% more interest than accounts launched earlier than 2010, easy access Cash ISAs launched today are paying 85% more interest on average than their older counterparts:
Easy access savings accounts
The average gross annual equivalent rate of interest on a balance of £1,000 is currently:
2.26% for accounts launched to date in 2011
1.99% for savings accounts that were launched during 2010
0.64% for easy access savings accounts which were launched before 2010
Easy access Cash ISAs
The current average gross AER interest payable on a balance of £5,100 (the current annual investment limit for Cash ISAs) is:
2.43% for Cash ISAs launched so far in 2011
2.07% for accounts that were made available to savers in 2010
1.31% for Cash ISAs that were launched prior to 2010
David Black, Defaqto's Insight Analyst for Banking, said: "Our research illustrates that newly launched savings accounts generally offer higher rates than those accounts which have been around for some time. Inertia is costly and savers need to realise that accounts which originally appeared in best buy tables may not remain competitive as time progresses. Quite simply, reviewing your account on a regular basis, and changing it to a more competitive deal, will increase your returns.
"In this era of low interest rates it really is worthwhile shopping around for newer, alternative options that will make your money work harder. As many banks and building societies are offering introductory bonuses and guaranteed minimum rates it really does pay to take advantage of them. However, if you are looking to close an account, do be mindful of any withdrawal restrictions or penalties that may apply."