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NatWest launches table-topping 2.85% savings account

By MoneySupermarket.com  |  Posted: October 23, 2012

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Savings rates have plummeted in recent weeks, but NatWest has bucked the trend of falling returns by launching a new market leading easy access account.

The account pays an annual equivalent rate (AER) of 2.85% and can be opened with a minimum investment of just £1. Here, we take a closer look at the account to see if it could be the right choice for you...

What's the deal?

NatWest's e-savings account pays 2.85% AER on a minimum deposit of £1. This rate includes a fixed bonus of 1.81% which is only payable for the first 12 months, so you may want to move your money once this disappears. The remaining 1% standard interest rate is variable.

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There is no maximum limit that you can hold in this account, but balances over £1m won't earn the bonus element. That's said, you can hold more than one e-savings account at any one time.

Bear in mind that if you do plan to deposit a large lump sum, only the first £85,000 will be protected by the Financial Services Compensations Scheme (FSCS).

Interest on this account is paid monthly rather than annually, which is useful for savers who are looking to supplement their regular income. And savers can make withdrawals at any time without penalty, which will suit those who require regular access to their money.

The account is available to both new and existing customers and can only be opened and operated online. You need to be aged 16 or over and permanently resident in the UK to open an account.

Any catches?

The large bonus – albeit fixed – on this account probably its biggest drawback, as savers will only earn 2.85% for the first year, bearing in mind that 1% of this is variable so could potentially change. This means to get any competitive return, you will have no choice but to move your money again at the end of the 12 months.

This account is also only available to open and operate online, so won't suit savers who prefer telephone or branch access to their savings.

What's the verdict?

Given that there has been so little for savers to celebrate in recent weeks, the introduction of NatWest's e-savings account is welcome news.

Only a few months ago it was possible for savers to find easy access accounts paying in excess of 3.00%, and while the NatWest account doesn't pay this much, 2.85% is still a respectable rate.

The account is especially attractive because there are no restrictions on the number of withdrawals you can make each year, and because it can be opened with just £1.

The next best rates on offer are from the AA's Internet Extra Issue 4 account, which pays 2.80% AER and can be opened with a minimum of £1, Nationwide Building Society's MySave Online Plus account, which pays 2.75% AER on a minimum investment of £1,000, and Derbyshire Building Society's NetSaver Issue 6 account, which pays2.75% AER, again on a minimum investment of £1,000. All these rates also include short-term bonuses.

Top tip

Savers who don't want to have to keep moving their money when bonus periods end may be better off considering a 'clean' account which doesn't include a bonus in the rate.

For example, Allied Irish Bank's (AIB) Easy Access Account Issue 3 pays 2.50% AER on a minimum investment of £1, and has no introductory bonus rate or withdrawal restrictions.

Similarly, Nottingham Building Society's eSaver Instant Issue 2 account pays 2.35% AER on a minimum investment of £500, and again has no bonus. Like the AIB account, you can make unlimited withdrawals from this account without penalties. However the last issue of this account which was payable just a week ago, was offering a rate of 2.62% with no bonus.

Please note: Any rates or deals mentioned in this article were available at the time of writing.

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