Published: 06/12/2018

At a glance

  • Bonus accounts pay you an introductory rate - be organised and make sure you know when this expires.
  • Bonus accounts are usually available as easy access cash ISAs or traditional easy access savings accounts.

While some of the best easy access accounts include an introductory bonus rate, their very nature requires savers to be a little more organised than if they have an account which is bonus-free.

This is because the rate of interest that you receive when you first open your bonus easy access account will drop when the bonus expires. At present, almost all bonus rates are paid for 12 months before they disappear from the equation and you are left with the residual non-bonus rate as your reward from there on in.

This means the onus is on you to review the competitiveness of the account in a year’s time and move your funds to a new account if a better rate is available elsewhere.

Bonus rates on ISAs

It is also possible that an easy access ISA may have a bonus element to it too, in which case the same benefits and potential pitfalls are applicable too.

One important thing to remember with a bonus easy access ISA is that when it comes to moving your money at the end of the bonus term, you should transfer your ISA rather than asking for your money to be withdrawn. This is necessary to preserve your tax-free benefits.

Moneyfacts tip

Moneyfacts tip Leanne Macardle

When you open your bonus account, make a note in your diary a month or two ahead of when your bonus expires to check out the rates that are on offer in the rest of the market. While your bank or building society should let you know that your rate is about to drop, there is no harm in having your own reminder in place too. 

Pros and Cons of a bonus account

  • When it comes to easy access, it is not unusual for the very best rates on offer to include a bonus. So if you are prepared to put in a little bit of effort to switch in the future, you are likely to walk away with better interest rate right now.
  • Your bank or building society should notify you before the rate is about to drop.
  • With rates changing all the time, the savviest of savers should be looking to review their savings accounts at least within a year anyway, regardless of whether you have a bonus account or not.
  • During the introductory period, you are effectively benefitting from a minimum rate guarantee, meaning your interest rate definitely won’t fall below the bonus amount for the allotted time. (That is not to say that the rate overall won’t fall, as it is still possible for the non-bonus rate to be cut).
  • The fall in rate at the end of the bonus term will usually be significant, unless you’re ready to switch elsewhere straight away. 
  • The responsibility ultimately lies with you to be vigilant over your rate and to switch your account when necessary.  
  • When the bonus term comes to an end on a bonus easy access ISA, you must remember to transfer your funds elsewhere rather than withdraw.

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

white piggy bank surrounding by coins

At a glance

  • Bonus accounts pay you an introductory rate - be organised and make sure you know when this expires.
  • Bonus accounts are usually available as easy access cash ISAs or traditional easy access savings accounts.

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