Banks resort to sneaky tricks as they try to compete with NS&I

Starved savers searching for a better deal should beware their new top rate may only last a few months.

Banks and building societies have recently launched a host of new accounts with sneaky catches in a bid to compete with the Government’s savings arm.

Since rising to the top of the best-buy tables, National Savings & Investments (NS&I) has scooped up large chunks of savers’ cash.

Banks and building societies have launched a host of accounts with sneaky catches in a bid to compete with the Government's savings arm, National Savings and Investments

Banks and building societies have launched a host of accounts with sneaky catches in a bid to compete with the Government's savings arm, National Savings and Investments

Banks and building societies have launched a host of accounts with sneaky catches in a bid to compete with the Government’s savings arm, National Savings and Investments

Now other providers want to look as though they are offering better rates, without giving too much away. 

One way of doing this is to offer a very short-term bonus, which makes the account look more attractive than it is.

They hope you will not notice when the introductory offer ends and the rate plummets. Or they might demand a very large sum of money to earn the top headline rate.

Others have introduced rules restricting how often you can access your money.

These marketing tricks had all but disappeared earlier this year when the Bank of England base rate was cut to 0.1 per cent – but they are now creeping back.

Anna Bowes, co-founder of website Savings Champion, says: ‘Make sure you know what the marketing men are up to. 

The accounts which limit your withdrawals are the most treacherous as you can end up earning just 0.05 per cent if you miscount.’

Even then, these accounts can fail to match the 1 per cent paid by NS&I on its easy-access Direct Saver or the 1.15 per cent on its Income Bonds. 

The latter are popular with pensioners because they automatically pay out interest each month rather than just once a year.

Skipton Online Bonus Saver has a headline rate of 1.2 per cent, just above the NS&I rate. But unlike the NS&I account, the rate automatically drops after 12 months to 0.7 per cent.

Principality Bonus Saver pays 0.8 per cent, with a bonus that lasts for a year. But after this your rate halves to 0.4 per cent. 

Paragon Bank’s Triple Access account pays a competitive 0.8 per cent. But you are only allowed three withdrawals a year. Any more and the rate drops to 0.25 per cent.

The new WeBSave Single Access from West Bromwich BS, out today, pays a higher 0.9 per cent but is even more restrictive. It allows you just one withdrawal a year. If you make more your rate drops to 0.05 per cent.

Skipton’s new eSaver online easy-access account went on sale recently with a headline rate of 1.1 per cent. You have easy access to your money and no withdrawal restrictions — but you need to deposit £50,000 to qualify.

Lesser-known notice accounts are in the fray, too, with rates of over 1 per cent. Here your bank or building society asks you to notify it in advance of any withdrawals. Those offering the best rates ask for more than three months’ notice.

Secure Trust Bank pays 1.18 per cent but you have to give 90 days’ notice. Paragon Bank’s account, out last week, pays 1.1 per cent on 120 days, while newcomer Allica Bank pays 1.1 per cent on 95 days’ notice.

sy.morris@dailymail.co.uk

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