'Instant access savings rates fall'
Updated on 19 August 2008
The number of instant access savings accounts paying returns of at least 5% has nearly halved during the past six months, research has showed.
Only 145 instant access accounts are currently offering returns of 5% or more, down from 270 at the end of January, according to financial website MoneyExpert.com.
At the same time the average return paid on the accounts has also slipped from 3.76% in January to 3.3% now, although interest rates have been cut twice during the period.
There are currently 1,501 instant access savings accounts on the market, with nearly 300 of these paying returns of less than 2%.
The group said the fall in rates paid on instant access accounts could be due to banks trying to attract longer-term savers in a bid to boost their liquidity.
It said the rates paid on bonds and other long-term products had been increased at the expense of instant access accounts.
Sean Gardner, director of MoneyExpert.com, said: "The drop in instant access savings rates reflects banks' efforts to encourage people to save for the long-term.
"They want to know they have money to play with and can't afford to offer as good a deals to attract short-term savings that can be withdrawn without penalty at a moment's notice.
"This explains why there are still some great deals on offer in regular savings and fixed term bonds."
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