It rarely pays to be loyal these days when it comes to the interest on your savings, but Coventry Building Society appears to be bucking that trend.
The UK’s second largest building society has launched the Loyalty 21 Day Notice Saver paying 0.65 per cent.
And while that rate is hardly one to blow away savers, it does beat the lowly average-paying account and most rivals.
The account will only be open to customers who have been with Coventry since 1 January 2020 and comes with a few catches.
The new savings account will be available to members who have been with Coventry Building Society continuously starting on or before 1 January 2020.
The main limitation is that savers will only be able to save up to £20,000 in the account, or £40,000 for joint accounts and can access their savings as many times as they want with 21 days’ notice, or immediately subject to 21 days’ interest penalty.
James Blower, founder of The Savings Guru said: ‘It is a really good offer from Coventry and it is great to see a provider rewarding loyalty rather than the best offers being for new customers only.
‘However, Coventry look after £39.1 billion of deposits in a market of £1.7 trillion and, given the fact it is only for existing members and has a £20,000 per person limit, it’s only going to be of interest to a few Coventry members and that’s not significant enough to impact the wider savings market.’
How does it compare to other deals?
Someone stashing away the maximum £20,000 in Coventry’s Loyalty 21 Day Notice Saver over the course of a year would earn £130 in interest.
That’s much better than what a saver would earn in the average easy access account paying 0.18 per cent, according to Moneyfacts – just £36 interest from a £20,000 lump sum after one year.
Notice accounts, such as Coventry’s, offer savers a higher return with the average notice account paying 0.45 per cent interest, according to Moneyfacts.
However, notice periods typically range between 30 and 90 days, meaning Coventry’s 21-day notice period is less than usual.
The best paying account with a 30-day notice period is Secure Trust Bank paying 0.55 per cent, according to Moneyfacts.
However, Investec Bank is currently offering a rate of 0.7 per cent for a 32-day notice account.
Savers who apply for that via the savings platform, Raisin can also qualify for a welcome bonus payment of up to £50 depending on how much they put in.
In terms of the highest rates on offer, Hampshire Trust Bank is currently offering a rate of 0.85 per cent, but savers will need to give a much longer 95 days’ notice to withdraw funds.
Although Coventry’s rate is competitive it is by no means the best notice deal around: it’s advantage, however, is that the notice period required to withdraw funds is only three weeks, which will give savers some peace of mind that their cash will be relatively accessible were they to suddenly need it.
Despite this, its notice period may still be an issue for those who prefer an immediate and penalty free access to their savings – particularly given that the best easy access rate now pays the same as Coventry’s ‘loyalty’ account.
Tandem’s easy-access account also pays 0.65 per cent and it provides instant access to savings, and allows unlimited deposits and withdrawals to a linked current account.
Other best buy options include Skipton’s and Coventry’s very own easy-access accounts but these also come with limitations.
Skipton pays 0.6 per cent, but limits savers to three withdrawals a year whilst Coventry, paying 0.55, allows six withdrawals per year after which savers forfeit 50 days interest.
In terms of other banks that reward loyalty, the list is hard to establish.
Cynergy Bank, for example, offer its existing savers, higher rates than it does to new customers.
‘There are other banks who offer loyalty rates but many don’t publish theirs – that doesn’t mean they don’t exist,’ said Blower.
‘Several of the new entrant banks, like PCF Bank for example, offer loyalty rates to savers at maturity which are better than those on sale to new customers.’
Loyalty aside, savers who are prepared to stash their cash away for a year or more without needing access, can achieve better returns by turning to a fixed rate deals, where there has been more competition and subsequently far better rates than instant-access.
The best one-year fixed rate account, offered by Zopa Bank, is currently paying interest of 1.12 per cent, while the best two-year deal by QIB (UK) is paying 1.37 per cent.
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