Savings rates are low at the moment as the Bank of England holds the base rate at 0.1 percent. Many savers claim to despise the current low interest rate environment but according to recent research from Moneyfacts.co.uk, consumers appear to be happy to keep their money in accounts that pay barely anything.
According to its findings, several top rate deals have been cut on both easy access and notice accounts.
But despite this, easy access accounts remain a “firm favourite” among savers, as balances now account for 58.7 percent of the savings market (excluding current accounts), up from 55.6 percent last January, according to data from CACI analysed by Paragon Bank.
Additionally, despite the low interest rate environment, a study from Wealthify suggested 43 percent of consumers are happy with how their cash savings perform and one in three (38 percent) were not confident with investing, with many continuing to turn to cash savings instead.
According to Moneyfacts.co.uk, the following top easy access and notice savings deals saw the biggest cuts since April 1:
- ICICI Bank UK: 95 Day Notice Savings Account – cut from 0.55 to 0.35 percent
- Aldermore: 30 Day Notice Issue 12- cut from 0.40 to 0.35 percent
- Chorley Building Society: 30 Day Notice Account Issue 3 – cut from 0.50 to 0.40 percent
- Virgin Money: M Plus Saver – cut from 0.50 to 0.35 percent
- Yorkshire Building Society: Annual Access Account Issue 8 – cut from 0.50 to 0.45 percent
- Teachers BS: Teacher Home Saver and Union Home Saver (35 Day Notice) – cut from 0.60 to 0.50 percent
- Moneybox: 95 Day Notice Account – cut from 0.60 to 0.50 percent
- The Melton BS: 30 Day Notice Issue 2 and Online 30 Day Notice Issue 2 – cut from 0.30 to 0.20 percent
- OakNorth Bank: 120 Day Notice Deposit – cut from 0.58 to 0.48 percent
- OakNorth Bank: 90 Day Notice Deposit – cut from 0.56 to 0.46 percent
- OakNorth Bank: 35 Day Notice Deposit – cut from 0.40 to 0.30 percent
- Monmouthshire BS: Escalator Instant – Issue 2 – cut from 0.45 to 0.25 percent
Rachel Springall, a Finance Expert at Moneyfacts.co.uk, examined these figures and urged savers to act fast where they can.
She said: “There may well be many accidental savers out there who are not prepared to take the risk to invest their cash and instead turn to a simple savings account, however it’s important these savers don’t debate the top rate deals for too long. It’s also wise for savers to think about whether they need quick access or could give notice for a higher return, as there are many notice accounts worth considering.
“Easy access accounts continue to be popular, but savers could get a better return if they are prepared to leave their pot for a few months. The top rate is 0.65 percent from Moneycorp Bank on its 90 Day Notice Account, which is 0.20 percent more than the easy access account from Kent Reliance at 0.45 percent, the top rate that allows multiple withdrawals and has no restrictions.
“These are both great deals to consider but there is no guarantee they will last for long, especially with recent weeks’ cuts on other deals indicating volatility.
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“One way for providers to cope with demand is to cut rates or remove the product from sale entirely. As it stands, many of the top deals in the easy access arena are restrictive in some way or impose withdrawal restrictions.
“Therefore, if savers are seriously considering these deals, then notice accounts should not be overlooked, so long as careful planning to access funds is put in place.
“As we would expect to see, last month brought relaunches of some ISAs, but this was relatively overshadowed by the continued volatility seen across easy access and notice accounts outside of the wrapper.
“Indeed, out of the new launches or improvements, there were no deals to take a market-leading position whatsoever, with providers clearly taking a more cautious approach with their offerings, in perhaps a more sustainable position in the market. As always, it’s vital savers act quickly to secure a top rate deal and review any existing accounts too.”
It should be noted, however, while Generation Z does not seem to be tempted by current challenger banks at the moment, the research detailed “zoomers” would be most interested in banking with PayPal (44 percent), Apple (27 percent), Amazon (27 percent) and Google (22 percent) in the future.
This suggests retail banks now may have to become much more digitally savvy in the future as this generation comes of savings age, with more than half (54 percent) saying offers and incentives would make financial services more attractive.
Niels Pedersen, a Senior Lecturer at Manchester Metropolitan University and author of Financial Technology: Case Studies in Fintech Innovation, commented on what the banking industry may need to do in light of these findings: “Gen Z’s interest in banking with the likes of PayPal, Apple, Amazon, and Google suggests that, to stand a chance, the financial sector must become more like the tech industry over the coming years.
“However, digital-first does not mean digital-only. A healthy balance between traditional and digital services must be struck for this generation – as the research shows. It’s vital for providers to build features and services that reflect these unique preferences and demands, particularly as 70 percent of the trendsetting Zoomer generation say they influence their families’ purchasing decisions.”
Ian Johnson, a Senior Vice President at Marqeta, concluded on this: “Gen Z is better prepared than previous generations and has a more practical approach to personal finance.
“Yet it is still important to educate Gen Z to help ensure broader financial inclusion and stability – whether by introducing them new to financial products that may benefit them, like “Buy Now Pay Later”, or through building targeted services that address Zoomers’ priorities, such as budgeting for putting down a deposit on a house. We believe the companies and financial providers that can meet these demands will be the ones rewarded with the spending power and loyalty of this trend-setting generation.”