Starling Bank has increased the rate on its Easy Saver account to 5% AER (4.87% gross) on balances up to £25,000. The rate includes a 2.50% bonus, but there is a catch.
Excellent rating from Moneyfacts
Caitlyn Eastell, personal finance analyst at Moneyfactscompare.co.uk, said overall the product has received an "excellent" rating from the financial product comparison provider. She recommended the account to people looking to switch current account providers and make the most of their "easy access" savings.
Ms Eastell said: "This account pays a market-leading rate when compared to its peers and can be opened with as little as £1, which may make it an ideal option for those starting their savings journey. Adding to its appeal, savers can make unlimited penalty-free withdrawals, meaning this may be a good home to keep emergency savings."
The catch and account details
She cautioned that there is a catch as customers will need to open or already have a personal account with Starling to open an Easy Saver account. They must also open the Easy Saver within 30 days of opening the new current account to receive the full 5%.
The most that can be invested in Easy Saver is £1million, but the account can only be opened via the Starling Bank app. It can be managed through the app or online.
Other top rates and considerations
Other options ranked among the "best" by Moneyfacts include 4.55% on Tembo Savings' HomeSaver, 4.24% on Tesco Bank's Internet Saver and 5% for LemFi's Instant Access Savings Account. Chase also appears among the top-ranking providers with its Chase Saver offer of 4.5%.
The same easy access accounts from Starling Bank, Tembo and Chase are identified as the "best" rates by MoneySupermarket. Money Saving Expert hails Starling, but also notes Cahoot's 5% on deposits up to £3,000. A rate of 4.55% from Cynergy on amounts up to £1m and Trading 212's cash ISA rate of 4.6% on up to £20,000 also feature as MSE's "top-picks" today (October 2).
Easy access rates tend to be variable, meaning they typically rise or fall in line with the Bank of England's base rate. Accounts of this type do offer more freedom when it comes to making withdrawals, so you can always transfer your money to another provider if your rate falls behind others. Some accounts will let you make unlimited withdrawals while some impose a limit in return for a boosted rate.
Other saving options are available, including ISAs, which are tax-efficient so you won't pay tax on interest or returns whereas interest from other savings accounts may be subject to tax. These accounts aren't covered by the annual allowance of £20,000 across all your ISAs per tax-year. As long as your savings provider is covered by the Financial Services Compensation Scheme, there is next to no risk of losing your money in either an ISA or regular savings account. The FSCS protects savings and current accounts up to £120,000.
