Little-known building society launches market-leading easy access savings account – but there’s a catch
A LITTLE-known building society has launched a new market-leading savings account but it isn’t for everyone.
Savers looking to make the most of their deposits can now get up to 4.25% back with a boosted easy access savings account.
Hanley Economic Building Society’s Branch Saver tracks the Bank of England base rate.
Right now, it’s paying savers 4.25% back on deposits above £1,000 and from June 1, the rate will increase to 4.5%
This means if you deposit £1,000 in the account on June 1, you can expect to earn £45 worth of interest by the end of the first year.
Sarah Coles, head of personal finance at Hargreaves Lansdown said: “The 4.5% savings rate offered on Hanley’s account is significantly better than anything available in the easy access market.
“It’s also more than is currently on offer in the notice market – where you can get up to 4.25% on 90 days’ notice.”
Notice accounts require that you give advance notice to your bank (up to 180 days in some cases) before you can make a withdrawal or you’ll forfeit the interest.
But easy access savings accounts usually do what they say on the tin – they tend to allow unlimited cash withdrawals.
However, there are a couple of catches to Hanley Economic’s new account which make it fall between the rules set out for both easy access and notice accounts.
While customers can make withdrawals without giving notice, they’re only allowed to withdraw up to £500 per calendar month without facing a penalty.
If you make more than a single withdrawal each month you’ll be subject to 30 days loss of interest on the amount withdrawn.
Sarah said: “You need to think carefully about the account’s access restrictions.
“You can only withdraw without penalty once a month. Even then, if you’re not close to one of a handful of branches, you need to send a request for withdrawal by post.
“For those on the doorstep of a branch, you can withdraw up to £500 at a time in cash.
“However, if you want to take out between £500 and £5,000 in cash you need to give 24 hours’ notice, and if you want any more, you’ll get a cheque.”
So, although it presents as an easy access account it doesn’t necessarily give you instant access to your savings.
“The account may be suitable for any money you’ll need for a specific expense in the relatively near future, for which you’ll have plenty of notice.
“However, it’s not the right place for your emergency savings, which you might need overnight,” said Sarah.
It’s also important to note that if the Bank of England’s base rate falls in the future so will the account’s savings rate.
If the interest rate reduces the account, Hanley Economic will write to you 14 days before it makes the change.
To open an account you must be aged 18 or over and permanently reside in the UK.
Savers wishing to make a deposit can open an account in their local branch or by sending an application form in the post.
The building society operates seven branches in:
- Biddulph, Staffordshire
- Cheadle, Staffordshire
- Festival Park, Stoke-on-Trent
- Hanley, Staffordshire
- Longton, Stoke-on-Trent
- Newcastle-under-Lyme
- Stone, Staffordshire
If you wish to apply by post return your completed and signed application form, which you can find on the Hanely Economic website, together with your cheque for your initial investment.
Your cheque should be made payable to: “Hanley Economic Building Society/Your Name”. Post everything to FREEPOST HEBS.
Once opened you’ll receive a passbook and your account can be managed in branch or via the post.
What are the alternatives?
There’s a handful of other types of savings accounts available to customers which might better suit your circumstances.
These include other easy-access accounts and regular savings accounts which allow greater flexibility when it comes to withdrawing your cash to spend on emergencies.
Of course, if you’re looking for a new savings account it’s always worth having a browse on price comparison websites.
Moneyfactscompare, Compare the Market, Go Compare and MoneySupermarket will help save you time and show you the best rates available.
These sites let you tailor your searches to an account type that suits you.
It’s worth checking the latest savings rates frequently as more movement in the market is predicted.
The Bank of England is expected to increase the base rate further in the coming months and this would see banks and building societies continue to battle it out to offer market-leading interest rates
Here’s a list of the other types of savings accounts on offer.
Easy access savings accounts – up to 3.71%
These savings accounts do what they say on the tin – they usually allow unlimited cash withdrawals.
However, this perk means they tend to come with lower returns, but there are a number of accounts worth considering.
Chip’s instant savings account offers customers 3.71% back in interest and unlimited cash withdrawals as long as they invest £1.
Those saving £1,000 in the account could expect to gain £37.10 in interest after 12 months.
Harpenden Building Society’s easy access account pays customers 3.69% back on savings between £100 and £250,000.
Sarah Coles said: “These rates are far better than the rates available on the high street, so if your savings are sitting with the same bank where you hold your current account, it’s well worth switching somewhere more rewarding.”
Notice savings accounts – up to 4.10%
Notice accounts offer slightly higher rates than easy-access accounts.
But you’ll need to give advance notice to your bank (up to 180 days in some cases) before you can make a withdrawal or you’ll forfeit the interest.
Sarah Coles said: “If you need access to your cash within the next year, but have the flexibility to give plenty of notice before withdrawing any of it, a notice account may work for you.”
Savers can currently get 4.01% on a 90-day notice account from Oxbury Bank.
Savers depositing £1,000 in this account can expect to gain £40.10 in interest after 12 months.
Regular savings accounts – up to 7%
These accounts generate decent returns but only on the basis that you pay in a set amount each month.
To get the best rates you’ll also need to hold a current account with the providers below as these linked regular savings accounts pay the top rates.
First Direct offers a regular saver paying 7% in interest.
You’ll need to save between £25 and £300 a month, and up to £3,600 a year.
For example, if you were to save £300 every month for 12 months with this account, you’ll earn approximately £136.50 in interest.
Lloyds Bank’s Club Lloyds Monthly Saver will pay 6.25% interest on savings of up to £400 a month, so if you’re looking to put away a little here and there it could be a good account for you.
If you deposit £400 every month for 12 months you will have a balance of £4950 after all interest is paid – but you’ll need to be a Club Lloyds member to have access to this account.
Fixed bond savings accounts – up to 4.92%
These offer some of the highest interest rates – but this comes at the cost of being unable to withdraw your cash within the agreed term.
If interest rates increase during your term you can’t move your money and switch to a better account.
Some providers do all withdrawals but you’ll be charged a hefty exit fee and will likely have to forfeit any interest gained.
Oaknorth Bank’s one-year fixed bond savings account pays savers 4.92% back on deposits between £1 and £500,000.
If you were to save £1,000 in the fixed bond over 12 months you’d expect to gain £49.20 in interest payments.