Which? finds six of top 10 instant-access accounts restrict penalty-free withdrawals

Which? reported on 7 July 2023 that six of the ten instant-access savings accounts paying the highest interest rates limit the number of withdrawals a saver can make, or the balance they must maintain, before a penalty applies¹. The finding came from Which? analysis of Moneyfacts data, correct as of 6 July 2023, covering products without restrictions on who can open the account¹.

The penalties take different forms. Some accounts cut the interest rate once a set number of withdrawals is exceeded, while others lock the account or deduct interest¹.

Account	Headline rate (AER)	Withdrawal limits and penalty
Family Building Society Online Saver	4.35%	None
Coventry Building Society Limited Access Saver	4.3%	50-day loss of interest if more than 6 withdrawals made
Principality Building Society Online Double Access	4.3%	Account locked after 2 withdrawals. Closure counts as a withdrawal. If interest rate is reduced, one more withdrawal is allowed.
Ford Money Flexible Saver	4.25%	None
Paragon Bank Triple Access Savings Account	4.25%	Lower rate of 1.5% is paid if more than 3 withdrawals made
Yorkshire Building Society Internet Saver Plus	4.25%	None
Skipton Building Society Bonus Saver	4.22%	None
Sainsbury's Bank Defined Access Saver	4.21%	Lower rate of 1% paid after 3 withdrawals
Chorley Building Society Easy Access Saver	4.2%	Lower rate of 1.95% paid after 2 withdrawals
Leeds Building Society Limited Issue Online Access Account	4.2%	If the balance falls below £1,000, the rate drops 0.05%

Source: Moneyfacts, correct as of 6 July 2023, rates subject to change¹.

The Chorley Building Society and Principality Building Society accounts allowed the fewest penalty-free withdrawals, at two each¹. Leeds Building Society's account pays 4.2% AER, but the rate falls to 0.05% AER if the balance drops below the £1,000 minimum opening deposit¹.

The research was published alongside Bank of England data showing a net withdrawal of £4.6bn from savings in May 2023, excluding NS&I accounts, which saw deposits rise. Which? said this was the highest figure since monthly records began in October 1997¹.

"Out of the top 10 accounts with the highest interest rates, we found six limited the number of withdrawals you can make or the balance you must maintain before imposing penalties."

Penalties also apply elsewhere. Coventry Building Society's instant-access Isa, paying 4.1% AER, allows six withdrawals a year before a 50-day loss of interest¹. A Lifetime Isa withdrawal before age 60, or for a purpose other than a first property purchase, carries a 25% charge: on a £5,000 balance that is £1,250¹. HMRC's Annual Savings statistics show unauthorised Lifetime Isa withdrawals rose 56% in 2022-23 to 74,650, from 47,850 in 2021-22, amounting to £47.2m¹. On fixed-rate bonds, early closure penalties typically run between 90 and 365 days of interest; Halifax's five-year fixed-rate Isa at 3.6% AER imposes 365 days' interest¹. FirstSave's 90-day notice account at 5% AER applies 90 days' loss of interest on early withdrawal¹.

Why it matters for households

The label "instant access" does not guarantee penalty-free access. For the six accounts identified, the number of withdrawals made in a year, or the balance held, determines whether the headline rate is paid or a lower rate applies¹. The effect is felt by savers who open an account on the advertised rate and later make more withdrawals than the terms allow, or whose balance falls below a set floor¹. The rates in the table were correct as of 6 July 2023 and are subject to change¹. The £20,000 Isa allowance for 2023-24 is unaffected by these account terms¹.