Complicated rules for “simple” savings accounts

New Which? research reveals four out of every 10 instant-access savings accounts and cash ISAs come with restrictions. 

We found 39% of the 285 instant-access and cash ISA savings accounts currently available come with rules and restrictions that can prevent people accessing their savings, or being eligible for the account in the first place.

We found:

  • In the worst cases, 32 of the 285 accounts called “instant-access” actually limit the number of withdrawals you can make during a year.
  • Nine out of the 18 highest-paying instant-access or no-notice savings accounts* reduce or stop interest if you make more than the set number of withdrawals (ranging from zero to 12).
  • Certain instant-access accounts from Danske Bank, First Direct, HSBC and Santander don’t allow any withdrawals without penalty.
  • Two-thirds (68%) of Which? members who save say they would expect to be able to withdraw their money from an account branded “instant-access”, whenever they liked, with no restrictions.
  • Additionally, three of the top 16 highest rates on instant-access accounts* are only open to savers of a particular age.
  • 10 of the 14 top-paying accounts, that have no other restrictions, are internet-only so those who prefer to bank in person may lose out on the best rate.
  • Other frustrating restrictions include accounts that are limited to people who already have a current account with the provider, or who live within a certain area or postcode.

We also found a third (29%) of instant-access cash ISAs, including nine of the highest paying 15, don’t allow you to transfer previous years’ ISA savings, meaning you could be missing out on higher rates of interest on these savings.

We are calling for savings providers to Scrap the Savings Trap and help people make the most of their money. Providers should be upfront about any restrictions and stop limiting transfers in to new ISAs to make it easier for people to switch to a better deal.

Which? executive director, Richard Lloyd, said:

“People often assume ‘instant-access’ means there are no strings attached, but too often that’s not the case and you can’t always access your savings without being penalised. Savings providers should be more upfront about the terms and conditions of all their accounts and allow transfers in to new ISAs.”

*Excluding cash ISAs.

Notes to editors: 

1.    Research methodology: During August 2014, we analysed 285 instant-access savings and cash ISA accounts to investigate the restrictions placed on these savings products. By ‘instant-access’ we mean those that use phrases which imply immediate access to your money such as ‘instant-access’, ‘no-notice’ or ‘easy-access’, in their marketing materials. 

2.    Which? Member survey methodology: During July 2014, we surveyed 937 Which? Members who save, to tell us about their expectations of how they would be able to access their money.

3.    The average interest rate for an ordinary instant-access savings account with no restrictions is 0.61%, while the average rate for an account with restrictions is 0.73%.

4.    The average interest rate on instant-access cash ISAs which allow transfers-in is 1.11%, compared with 1.32% on accounts that don’t.

5.    Although some of these instant-access accounts do clearly outline the restrictions, we feel that limitations on withdrawals goes against the spirit of an instant access account. Many providers offer alternative instant access accounts with more flexibility, but these typically pay a lower rate of interest.

6.    The instant-access accounts which severely restrict withdrawals:

instant access restrictions

7.    Instant-access cash ISAs accepting, and not accepting, transfers-in:

cash isas

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