Focus On: 3% savings account

The easy access savings account market is dominated by accounts which offer a bonus, usually only for the first year.

The new Easy Access Reward Account from Allied Irish Bank, which launched on Tuesday February 7, offers a refreshing alternative to savers looking for the competitive returns while wanting to retain some access to their cash. Laura Howard takes a closer look... What's the deal? The Easy Access Reward Account pays a gross rate of 3% AER which is comprised of two parts. The first is a 1.5% Standard Variable Rate (SVR) which can move up and down at the saving provider's discretion. The remaining 1.5% is paid as a fixed rate bonus for the first five years after opening the account. Interest is paid on the anniversary of this event, or on the next business day. The account can be opened with an initial �1 deposit and allows a maximum balance of �1million. Any catches? In spite of its name, the Easy Access Reward Account comes with several restrictions when it comes to accessing your cash. If you want to benefit from the fixed 1.5% bonus element of the account, you will be limited to four withdrawals a year. Make any more than that and the rate will drop to the SVR only (currently of 1.5%) for the year you made the withdrawals. Withdrawals are unlimited from the year six onwards, although the rate will drop to 1.5% or whatever SVR applies at the time. The Easy Access Reward Account is also only accessible via post and telephone which could deter savers who like to operate their finances online. Savers could also be forgiven for feeling nervous about investing with an Irish bank given the country's current economic difficulties, but Allied Irish Bank is authorised and regulated by the Financial Services Authority in the UK. That means the first �85,000 of any deposits held with the bank are fully protected by the Financial Services Compensation Scheme (FSCS). What's the verdict? On rate alone, the Easy Access Reward Account, paying 3%, is not market-leading. The West Brom Direct Bonus Account, which also restricts withdrawals to four a year, offers a higher rate of 3.13%. However, the 1.38% bonus included in this rate only lasts for a year (after which time the rate will drop to 1.75%). This compares to a potential five-year 1.5% bonus offered by Allied Irish Bank's account - and for the same access terms. What's more, savers will need at least �10,000 to open the West Brom account opposed to the minimum �1 deposit required by Allied Irish Bank. This makes the Easy Access Reward Account a great deal for all savers who are reluctant to move their cash to chase the best rate. But if you didn't want to move your cash at all, Virgin Money's Easy Access E-Saver account which offers a rate of 2.85% with no bonus for minimum investment of a �1. Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct

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