Beware Of 'Easy Access' Savings Accounts
February 2007
Most banks and building societies cannot resist playing marketing games with their customers. Case in point is the phrase “Easy Access” when it comes to describing a savings or deposit account.
Traditionally there have always been two types of savings accounts –
- Instant Access Accounts where your money could be withdrawn at anytime without penalty, and
- Notice Accounts where the interest rate was normally higher but the customer had to give say 1 month's notice in order to withdraw money.
Things Get Complicated
But now things have got so much more complicated. In fact so much so that savings accounts marketed as “Instant Access” can now come with a penalty for withdrawing your money! It is therefore always wise to check the small print on any account you’re thinking of opening.
“Easy Access” But With Penalties
One of these new breeds of savings accounts are referred to as “Easy Access” accounts and are a hybrid of “Instant Access” and “Notice Accounts”. So yes, you can withdraw money today but with a penalty.
Case in point is the HSBC Bank's new version of its Online Saver Account which pays a healthy 5.75% gross a year for deposits of between £1 and £50,000. But, it comes with a 30 day loss of interest penalty when withdrawals are made. BUT there’s a very nasty sting to all of this – ALL savings suffer a loss of interest for the month. So have £10,000 deposited in the account, withdraw £1,000 and the balance of £9,000 receives no interest for the month.
Summary
HSBC do make it very clear that there is a 30 day penalty period for this account but still cynics might suggest that the marketing phrase behind it is somewhat designed to fool people into thinking that the account is something it is not.
Whatever the case with so much competition in the savings market at present people can easily find not only a true Instant Access account but one which pays market beating interest rates.
An example of this is the IceSave account - read more about it on this InvestorProfit.com article.
See Also
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