Average Easy Access Rates up 0.34 Per Cent Compared to 2010

Oct 18, 2011, 06:30 ET from moneysupermarket.com

CHESTER, England, October 18, 2011 /PRNewswire/ --

  • Average bonus rates on easy access drop 0.26 per cent compared to last year
  • Savers with bonus offers expiring should look to switch to maximise returns

Increased competition within the easy access savings market, particularly with smaller players competing for funds, has seen the average rate on the top 10 easy access account increase by 0.34 per cent compared to this time last year, despite no movement in Bank of England Base Rate, according to analysis from MoneySupermarket.

Britain's number one comparison site looked at the top ten easy access rates currently on offer compared to the same period in 2010, and found that the average AER has seen an 11 per cent increase, with the current average at 3.05 per cent. However, the average bonus rate had decreased from 1.76 per cent to 1.50 per cent; meaning the average bonus rates now account for 49 per cent of the total AER, compared to 65 per cent last year.

The majority of top ten easy access savings accounts include a bonus, typically for 12 months, allowing savers to take advantage of headline grabbing rates. Nationwide building society, for example is currently offering 3.12 per cent - 1.58 per cent of which is made up of a bonus. Once the bonus rate expires, rates drop significantly. For example, a saver that took out the leading NatWest e-Savings account in October 2010 would find their 2.89 per cent AER drop to 1.04 per cent 12 months later, resulting in the loss of £92.50 in interest in a year.*

Kevin Mountford, head of banking at MoneySupermarketcommented: "A 0.34 per cent increase in average easy access saving rates is great news for savers, particularly against a backdrop of a static base rate. Many of the top paying accounts are paying interest of at least six times that of the base rate, unheard of before the recession.

"Providers use attractive headline bonus rates to lure in customers, and in some cases, the bonus can mean double the amount of interest gained for a year - which for those wanting more from their money seems like a no brainer. However, the benefits can soon be wiped out if customers forget to switch once the promotional period has expired. Bonuses are good news for consumers but once they expire it is time to switch, in order to make sure their savings are working as hard as possible for them.

"It is also imperative that those with an easy access savings account check their small print for any restricted access that may apply, as some providers may allow as little as one penalty-free withdrawal during the term."

*Based on savings amount of £5,000

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SOURCE moneysupermarket.com