Providers fail to pass on the Bank of England base rate hikes to savers, here’s the best deals – iNews

by MoneySaverExpert

Less than half of savings providers have boosted what they pay on instant access accounts, despite the Bank of England hiking its base rate, new research shows.

Only 10 per cent of providers have passed on the full 0.25 per cent increase to their customers, according to financial information firm, Defaqto.

The Bank of England raised the base rate to 0.5 per cent on 3 February, up from 0.25 per cent – one of the first increases since the Covid-19 pandemic emerged.

While still being a relatively small hike by historical standards, it should have helped savers who have faced near zero rates for years.

However, since the hike, just 42 out of 99 of providers have raised rates for their instant access savings accounts.

Where providers have increased rates, they did so by a small amount, with rates only rising by 0.18 per cent, on average, since 1 February.

For instant access accounts specifically, the “best buy” rates have gone up by 0.11 per cent since December 2021.

Katie Brain, consumer banking expert at Defaqto, said: “On the whole rates are still better than they have been for a while and that is good news, but it is still worth having a look around at what is on offer to get the best rate you can for your cash.

“To make the most of your savings, it’s worth shopping around and seeing if you are eligible for a better rate at your local building society.

“Think about whether you need to access the money instantly as rates can be better if you can tie up your money for a fixed period.”

More from Money

Where are the best deals?

It’s vital to check whether the rate is fixed or variable as it could change after the account has been opened.

Savers should make a note of when the fixed interest rate period ends as they will usually be switched to the provider’s standard variable rate after this, which will be lower.

Shopping around may be particularly beneficial at the moment, as many of the best buys at the end of 2021 had restrictions on withdrawals, but the best rates today do not.

Currently, Cynergy Bank has the best instant access savings account according to Defaqto, with its Online Easy Access Account paying 0.8 per cent.

Tandem has the next best offering with its Instant Access Saver account offering 0.77 per cent.

For those willing to lock their money away, fixed term accounts offer more competitive rates.

Tandem’s One Year Fixed Saver provides the best rate of 1.55 per cent, with a minimum deposit of £1,000.

Savers will want to take advantage of these deals where they can as there are 912 savings accounts available which can beat the Bank of England base rate, according to separate data from finance comparison site, Moneyfacts.

This is the lowest count since November 2008 and the first time the it has dropped below 1,000 since January 2009.

Rachel Springall, finance expert at Moneyfacts, said: “Many savers will find they are unable to beat the Bank of England base rate as there remains to be many deals incapable of outpacing 0.50 per cent.

“Despite encouraging signs of rates rising, there is clearly much more room for improvement for cash savers, but it could take a few months yet before consumers will see a base rate rise passed onto them, but there is no guarantee this will even come to light.”

Do you have a reader query, concern or a financial issue you want addressed? Contact: C.Coombe-Whitlock@inews.co.uk

You may also like

Leave a Comment