Yorkshire Building Society is offering an attractive interest rate through a market leading easy-access deal. It has recently raised the rate on its Online Rainy Day Account from three percent to 3.35 percent.
It has recently raised the rate on its Online Rainy Day Account from three percent to 3.35 percent.
This makes the offer one of the most enticing on the market for savers looking to boost their funds.
This is great news particularly for those who are starting to build up their savings, as the 3.35 percent rate is available on balances up to £5,000.
However, for those hopeful to save more, the rate will be reduced.
READ MORE: Cold Weather Payments triggered 112 times – how to check eligibility
At present, any cash held above £5,000 will instead earn a rate of 2.85 percent which is up from 2.5 percent previously.
To open the account, savers can start with just £1, and save up to £500,000 – providing a great deal of flexibility.
But only £85,000 of savings will be covered under the Financial Services Compensation Scheme (FSCS), per person, per financial institution should the worst happen.
A hike in interest rates means someone with £5,000 in the account will earn approximately £170 after one year if the interest rate on the account remains the same.
Pensioners join forces to stop thousands receiving ‘poverty pension’ [INSIGHT]
Barclays warning as Britons lose £4,330 in ‘most common’ fraud attempt [WARNING]
MP calls for state pension to increase by more than 10.1% [UPDATE]
But for those with a balance above this, for example, £10,000, they should prepare for interest to be administered in two tiers.
Under £5,000, the balance will earn 3.35 percent, but the additional sum will earn the lower rate of 2.85 percent.
This would mean after a 12 month period, a saver starting with £10,000 would earn £310 with a blended rate of 3.1 percent.
The building society explains its blended rate takes into account the different rates of interest on the proportions of a person’s balance within each interest tier.
READ MORE: Unless Jeremy Hunt performs a miracle in his next Budget we’re doomed
It means people should be able to earn the best possible interest on their entire balance, rather than just a portion of it.
However, while the interest rate is particularly attractive, there is a small catch savers should bear in mind when it comes to access.
There is limited access to this account, as withdrawals are only permitted on two days per year, so it is unlikely to suit someone who wants constant access to their money.
But savers will be able to close this account at any time they so choose, regardless of whether they have already used their withdrawal days or not, to add flexibility.
As the name of the account suggests, it can only be opened and managed online, but this is far easier than it used to be.
In addition, only one account per person is permitted.
To be eligible for this account a person must be at least 16 years old and a UK resident.
People can hold the account on their own or jointly with someone else, but the account cannot be opened in trust
Yorkshire Building Society added: “If you are named on more than one Online Rainy Day Account, the most recent account opened will be closed and the funds returned to you.
“For joint accounts you can only be the Main Holder on one account but can be Other Holder on the second account.”