Post Office launches high interest account

The Post Office today launched a new instant access savings account paying an interest rate of 4.75%.

The Instant Saver account is available to customers aged 11 and over who have at least £500 to put away.

The 4.75% interest rate, among the best available on the high street, includes a 1% bonus payable for the first 12 months of the account being open.

The rate is guaranteed to be within 1% of the Bank of England base rate, presently 4.5%.

Savers can make withdrawals without notice, although only the first six each year are free of charge. After that, savers pay £1 for each withdrawal.

The account can be opened at any of the UK's 14,500 Post Office branches, online at www.postoffice.co.uk or by phone.

Alan Cook, the Post Office's managing director, said: "There's more than £450bn sitting in bank and building society accounts which are neither as competitive or convenient. Moving that money to the Post Office would give customers a £9bn payout in the first year and make those savings more, not less, accessible.

"It's time the savings market stopped being dictated to by organisations that pay low rates, restrict access and convenience and try to confuse us all with complex interest rate structures that hide the true costs of accessing our own savings."

However, Terry Cutworth, a researcher at financial information firm Moneyfacts, said that while the new account would feature in the best buy charts for branch-based accounts, there were better rates on the market.

She added that the rate's inclusion of a bonus could make it unattractive to some savers.

"Some people will take this account and move their money elsewhere after a year, but I think of the Post Office as being a place where the older generation feel their money is safely looked after.

"Although it will be safe, they will need to keep an eye on it and decide what to do next year when the bonus goes, because 1% is quite a drop," Ms Cutworth said.