Best-buy savings account: Coventry easy-access deal pays 3.25% interest

Coventry Building Society has increased its interest rates for savers, including launching a new best-buy easy access account. 

The rate on its Limited Access Saver (6) is rising from 2.85 per cent to 3.25 per cent meaning it tops This is Money’s independent best buy savings table by 0.25 percentage points.

The account can be opened with as little as £1, and has a maximum balance of £250,000. 

However, as with all savings accounts, only £85,000 per individual is covered by the Financial Services Compensation Scheme.

Savings experts believe that today’s move by Coventry should help raise the bar and lead to further rate rises for easy-access savers.

Coventry’s Limited Access saver is rising from 2.85% to 3.25% meaning it now tops This is Money’s independent best buy table

A spokesperson for savings consultancy The Savings Guru said: ‘It’s great news for savers that a provider which was already second in the market is increasing its rate so strongly. 

‘As Coventry are the second largest building society in the UK, they are big enough to sustain a period of time at the top of the tables. 

‘This is good news for savers as it is likely to force others to respond and it is only a matter of time before there are more easy access rates at or above 3 per cent. 

‘With the Bank of England set to meet on 5 February to decide on the base rate, and the market widely expecting another increase, we expect easy access savings rates to continue upwards in the first quarter of 2023.’ 

What savers need to know before signing up

Although Coventry’s account allows for instant access, it does come with certain restrictions.

Savers can take money out of their account up to six times a year without having to pay a charge. 

From the seventh withdrawal onwards, which can include closing the account, they’ll receive a charge equal to 50 days’ interest based on the amount they’re withdrawing. 

Someone stashing £10,000 into the account could expect to earn £325 of interest over 12 months. 

Coventry’s new rate will automatically be applied to anyone who has opened the Limited Access Saver (6) since it launched on 2 December.  

However, savers on previous issues of the account, such as the Limited Access Saver (5) will not receive the same rate rise, although they are likely to see some improvement. 

Aside from the its Limited Access deal, 97 per cent of all savings held with Coventry will see rate increases as of today.

This includes an increase of 0.85 per cent on its Regular Saver which will now pay 4 per cent. Its Junior cash Isa deal is also rising to 3.8 per cent.

How does it compare to other savings accounts? 

After Coventry’s offering, the next-best account in terms of interest is Yorkshire Building Society‘s 3 per cent deal – but it is only available on balances up to £5,000.

Anything above £5,000 will earn a 2.5 per cent rate. It also only allows two withdrawals each year, which makes it rather restrictive for anyone hoping to rely on these savings at any given time.

Savers might also want to consider Zopa Bank, which pays 2.86 per cent and doesn’t limit savers to a certain number of withdrawals each year.

Savers can also boost their rate all the way up to 3.26 per cent by locking money away for longer via a selection of linked notice accounts. 

Top spot: Coventry Building Society offers the best easy-access deal on the market open to all

Savers with bank accounts with either HSBC, Barclays or Santander might also want to make the most of exclusive easy-access deals.

Barclays banking customers who sign up to its Blue Rewards scheme will be able to benefit from an exclusive easy-access savings deal. 

The Barclays Rainy Day Saver account pays 5.12 per cent interest on balances up to £5,000. That could equate to more than £250 in interest after one year.

The drawback is that savers will need to pay £5 a month to become a Blue Rewards member – but it does come with other advantages such as £5 monthly cashback for having two direct debits paid out of the bank account.

Exclusive club: Barclays banking customers can access a deal paying 5.12 per cent interest on balances up to £5,000

HSBC’s Online Bonus Saver account is essentially an easy-access deal paying 3 per cent on balances up to £10,000, exclusive to HSBC banking customers.

The drawback is that the 3 per cent rate only applies for any month in which no withdrawals are made. During a month in which a withdrawal is made or the account is closed, savers will only earn 0.5 per cent.

This means savers who sign up would be wise to treat this account as their emergency fund, rather than everyday savings they can dip in and out of.

This post first appeared on Dailymail.co.uk