Yorkshire Building Society has launched a new easy access savings account paying ‘tiered’ savings rates. This means savers with large balances can earn a higher interest rate than those with smaller sums, which is rather unusual.
But putting aside this gimmick, how does the new account stack up compared to other easy access deals? Let’s take a look.
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How do tiered savings rates work?
Yorkshire Building Society has launched a new Internet Saver Plus (Issue 10) savings account. The account is easy access, meaning you can add and withdraw funds at will.
The account has three tiered savings rates, and those with the highest balances will earn the highest rate. Here’s how they apply:
Balance
Rate (AER variable)
£1 – £9,999.99
0.6%
£10,000 – £49,999.99
0.65%
£50,000 – £500,000
0.7%
Importantly, the savings rate you earn is based on your total account balance. This means that if you put £12,000 in the account, you’ll earn 0.65% AER variable on your whole balance. In other words, you won’t earn 0.6% on the first £10,000, and then 0.65% on the remaining £2,000.
What else should you know about this account?
To open the Instant Saver Plus account, you must apply online. Interest is paid once a year on 31 March, which you can have paid into the same account if you choose.
As it’s an easy access account, the interest rate is variable, so it can change at any time. However, if it does, you’ll be given sufficient notice, so you can move your money to another account if you wish.
It’s also worth knowing that Yorkshire Building Society offers a near-identical Instant Saver ISA Plus account that pays the same tired savings rates. The only difference is that your savings are held within an ISA tax-free wrapper.
However, as most savers don’t pay tax on savings interest anyway due to the £1,000 personal savings allowance, opening an ISA over the normal savings account may not benefit you. Also, be mindful that you can only put up to £20,000 into an ISA within a single tax year. This means that if you don’t have an existing ISA to transfer in, you won’t be able to grab the top tier savings rate.
Finally, while this account pays the highest savings rate to those with high balances, do bear in mind the FSCS savings safety protection limit of £85,000. Put simply, this protection ensures that if a bank or building society goes bust, your savings are safe – but only up to the limit.
To put it another way, if you want this protection, avoid stashing more than £85,000 into any single savings account.
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How does the account compare to other savings rates available?
If you do have over £50,000 or more in savings, you can earn 0.7% AER variable with Yorkshire’s new account. Yet even if you have such a large sum to stash away, this rate can be beaten by other easy access accounts out there.
Right now, you can grab 0.75% AER variable through Atom Bank. You can make as many withdrawals from this account as you like. However, as it’s an app-only bank, you’ll need a smartphone to apply.
If that’s not for you, then Shawbrook Bank offers an easy access account that pays a slightly lower 0.72% AER variable. You can open it online and save from £1,000 to £85,000. While unlimited withdrawals are allowed, you must take out at least £500 a time.
For more options, see The Motley Fool’s top-rated easy access savings accounts.
How can you boost your savings rate?
While easy access deals are on the rise, rates are still very low. If you are looking to boost the savings rate on your cash, you may wish to explore opening a fixed-term, or regular savings account.
Currently, you can earn up to 2.2% in a fixed savings account. However, to get this rate you must be content to lock away your cash for five years. Shorter one-year fixes, meanwhile, pay up to 1.45%. See our list of top-rated fixed savings accounts for all of the details.
Alternatively, if you can save every month, then look at our list of top-rated regular savings accounts too. Right now, you can earn up to 5% AER.
Explore even more accounts! To compare savings rates from different types of accounts, take a look at our top-rated savings accounts of 2022.
Please note that tax treatment depends on your individual circumstances and may be subject to change in the future. The content in this article is provided for information purposes only. It is not intended to be, nor does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
The post Savings rates: new account rewards savers with BIG balances (but is it any good?) appeared first on The Motley Fool UK.
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