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Online-only savings accounts offer top deals

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03/05/2017
Savers unwilling or unable to open an account online are missing out more than ever on top-paying deals.

The gap between rates on online-only savings accounts and the rest of the market has widened significantly in the past year, according to analysis by Moneyfacts.

Twelve months ago, the average two-year fixed bond rate difference stood at 0.06%, but it has shot up to 0.21% today.

The number of online-only deals has also risen as more challenger banks enter the market operating exclusively online.

Three of the four best buy easy access deals can only be opened via the internet. These are from RCI Bank (paying 1.10%), Leeds Building Society (1.05%) and Charter Savings Bank (1.01%).

Britannia’s easy access account, paying 1.10%, can be set up by post, in branch or online.

Savers looking for a one-year fixed rate bond could find themselves 0.29% worse off by neglecting online-only accounts, Moneyfacts said.

Charlotte Nelson, finance expert at the firm, said: “While it has always been the case that online savings accounts have paid slightly more than their counterparts with other opening methods, today there is a marked divide between the online-only savings account sector and the rest of the market.

“A lot of the new challenger banks that have come onto the market operate exclusively via the internet. With competition among these banks high and many of them sitting in best buys, it is little wonder that the gap has grown.”

But the boom in online-only accounts is not just down to challengers.

The government’s savings arm, National Savings & Investments, was recently criticised for making its new market leading Investment Growth Bond available online only.

The three-year bond pays 2.2% on savings between £100 and £3,000.

“The trend is particularly worrying for older savers, who are more likely to lack the confidence to use the internet,” said Nelson.

“With branches closing up and down the country, not only do they have less choice on the high street, but any reluctance to move online means they may receive significantly less interest than younger, internet-savvy savers.”

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