Savings rates: As FCA puts banks on war footing what are the best accounts for your cash?
As interest rates look set to increase, we look at the best and the worst paying savings accounts on offer.
Banks and savings providers have come under fire for not passing on interest rate rises to savers
As with any banking product which pays out interest, savers do need to keep a constant eye on rates, even when rises are passed on, many savings accounts come with loyalty bonus rates that drop off after the account has been open a year or more.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, pointed out that many savings providers had made positive changes to the top rate deals
Savings accounts: things to bear in mind
Springall urged savers to be pragmatic about rates, while accounts are paying more because of rising interest rates, very few savings accounts offered inflation-beating rates.
- The Consumer Price Index (CPI) fell to 10.1 per cent during March, from 10.4 per cent in February.
- The number of deals able to outpace inflation has not changed since last month. There is not one standard savings account that can outpace 10.1 per cent
- The predicted rate for inflation during the first quarter of 2024 is three per cent
| Savings accounts | ||||
| Top savings deals at £10,000 gross | 21-Apr-21 | 13-Apr-22 | 22-Mar-23 | Today |
| Easy access account | Virgin Money – 0.50 per cent | Chase – 1.49 per cent | Chip – 3.35 per cent | Chip – 3.49 per cent |
| Notice account | Moneycorp Bank – 0.65 per cent (90-day) | OakNorth Bank – 1.25 per cent (120-day) | The Melton BS – 3.50 per cent (180-day) | Marsden BS – 4 per cent (180-day) |
| One-year fixed rate bond | Atom Bank – 0.62 per cent | Al Rayan Bank – 1.85 per cent** | Al Rayan Bank – 4.43 per cent** | Allica Bank – 4.56 per cent |
| Two-year fixed rate bond | BLME – 0.80 per cent** | Al Rayan Bank – 2.20 per cent** | Al Rayan Bank – 4.55per cent* | SmartSave – 4.61 per cent |
| Three-year fixed rate bond | Hodge Bank – 0.95 per cent | Cynergy Bank – 2.28 per cent | Al Rayan Bank – 4.60 per cent* | Al Rayan Bank – 4.60 per cent** |
| Four-year fixed rate bond | Zopa – 0.94 per cent | Gatehouse Bank – 2.25per cent** | UBL UK – 4.53 per cent (payable on maturity) | United Trust Bank – 4.56 per cent |
| Five-year fixed rate bond | Gatehouse Bank – 1.40 per cent* | Gatehouse Bank – 2.50 per cent** | UBL UK – 4.63 per cent (payable on maturity) | UBL UK – 4.63 per cent (payable on maturity) |
| ISA market analysis | ||||
| Top savings deals at £10,000 gross | 21-Apr-21 | 13-Apr-22 | 22-Mar-23 | Today |
| Easy access ISA | Yorkshire Building Society – 0.45 per cent | Marcus by Goldman Sachs® – 1.00 per cent | Cynergy Bank – 3.20 per cent | Yorkshire Building Society – 3.35 per cent |
| Notice ISA | The Melton BS – 0.50 per cent (60-day) | The Melton BS – 1.00 per cent (100-day) | Furness BS – 3.30 per cent (45-day) | Marsden BS – 4.00 per cent (180-day) |
| One-year fixed rate ISA | Monmouthshire BS – 0.49 per cent | Gatehouse Bank – 1.40 per cent* | Santander – 4.15 per cent | Gatehouse Bank – 4.20 per cent** |
| Two-year fixed rate ISA | State Bank of India – 0.65 per cent | Gatehouse Bank – 1.75per cent** | Santander – 4.20 per cent | Paragon Bank – 4.28 per cent |
| Three-year fixed rate ISA | Close Brothers – 0.70 per cent | Gatehouse Bank – 1.85 per cent** | UBL UK – 4.28 per cent (payable on maturity) | Virgin Money – 4.26 per cent |
| Four-year fixed rate ISA | Hodge Bank – 0.65 per cent | Gatehouse Bank – 1.90 per cent** | UBL UK – 4.37 per cent (payable on maturity) | UBL UK – 4.37per cent(payable on maturity) |
| Five-year fixed rate ISA | Shawbrook Bank – 1.10 per cent | Gatehouse Bank – 2.10 per cent** | UBL UK – 4.33 per cent (payable on maturity) | UBL UK – 4.33 per cent (payable on maturity) |
Springall said it was “imperative” savers take some time to compare the latest deals. “Inflation is still a sore point, as it erodes the true spending power of savers’ cash, but this should not deter investors from switching their deals.”
“Starting a new tax year has also seen the introduction of more activity within the ISA market, and both those looking for a new deal to invest for the 2023/2024 tax year, or perhaps transfer older ISA subscriptions, can find some attractive rates across the variable and fixed sectors.
“As has been the case for a few years, consumers should compare both rates within and outside of an ISA-wrapper while considering both their Personal Savings Allowance (PSA) and ISA allowance. Signing up to newsletters and rate alerts is a great way to keep on top of the latest deals and compare the interest rates offered across all the different products.”
Savings: why now may be the time to fix your rate
Now could be the perfect time for savers to lock into a fixed-rate bond, according to independent financial information and ratings experts, Defaqto.
Katie Brain, consumer banking expert at Defaqto, said: “With talk of interest rates starting to fall later this year, providers who usually offer higher interest rates to savers willing to commit for longer periods, are now launching similar rates for much shorter fixed periods.
We are starting to see some of the strongest interest rates we have seen in the last few months on relatively short fixes of nine months or one year. The best nine-month fixes are offering 4.25 per cemnt and the best one-year fix is offering 4.61 per cent interest,
If you’re happy to commit to a slightly longer-term two-year fix, the highest rates on offer are 4.70 cent or for a three-year or five-year fix you can get a rate of 4.65 per cent.
“It’s unusual for providers to offer the same or similar rates of interest for the same duration of fixed deals, which reflects expectations in the market for inflation to drop later this year and the Bank of England’s base rate to steady and potentially fall.
“It’s also worth thinking about tax. Basic-rate taxpayers have to pay tax on interest over £1,000, higher-rate taxpayers have to pay tax on interest over £500 and additional-rate taxpayers have to pay tax on all interest earned. It’s worth checking whether interest is paid annually or at the end of the fixed rate term if this is likely to affect you.”
Fixed Rate Bonds Best Buys (based on £10,000)
Term – nine months
Atom Bank – Nine month fixed saver – 4.25 per cent (minimum deposit £50)
Raisin UK Isbank UK – 4.25 per cent
Secure Trust Bank – 4.15 per cent
One year term
My Community Bank – 4.61 per cent
Cynergy Bank – 4.60 per cent
Investec Bank – 4.60 per cent (minimum deposit £5,000)
Two year term
Raisin UK – 4.70 per cent
Atom Bank – 4.65 per cent
My Community Bank – 4.63 per cent
Three year term
Atom Bank – 4.65 per cent
My Community Bank – 4.64 per cent
DF Capital – 4.62 per cent
Five year term
Atom Bank – 4.65 per cent
United Trust Bank Ltd – 4.61 per cent
Tandem. – 4.60 per cent
| Term | Average Rate April 2022 | Average Rate April 2023 |
| 9 Month | 0.78 per cent | 3.76 per cent |
| 1 Year | 1.01 per cent | 3.73 per cent |
| 2 Year | 1.33 per cent | 4.01 per cent |
| 3 Year | 1.55 per cent | 4.03 per cent |
| 5 Year | 1.81 per cent | 4.11 per cent |