Introductory saving rates “misleading”

Consumers should be wary of savings accounts offering interest rates of five per cent or more, according to new research.

Sainsbury’s Bank claims that just eight of the 38 savings accounts which currently offer such a deal, including its own Internet Saver account, do so without relying on introductory bonuses or restrictions.

The bank says that since the Bank of England raised the base interest rate by 0.25 per cent last month, an extra 31 instant/easy access and notice accounts have begun offering interest rates of five per cent or more.

But of these, 18 rely on introductory bonuses to meet their offer, while the interest rate pledge is subject to some form of restriction on 23 of the accounts, with 11 of those on offer requiring that customers give notice before withdrawing money.

“Interest rates of five per cent or more are very attractive but some of the accounts paying these are heavily reliant on short-term bonuses or restrict access to your savings,” said Peter Wood, director of savings at Sainsbury√≠s Bank.

“Before choosing an account, make sure you understand and accept what your interest rate is dependent upon otherwise you could be in for a nasty surprise when it drops,” he warned savers.

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