Many people are trying to find decent accounts to stick their savings – not least because actually putting it in bank is basically losing money due to the rate of inflation. The Money Saving Expert site, founded by Martin Lewis, offers some suggestions of the best traditional savings accounts to try.
Experts say it’s definitely worth checking the status of your normal savings account, not least because in many cases the interest rate you signed up for is often chopped a year or two down the line – meaning that it is depreciating even more quickly. With inflation running at around 10 per cent it’s certainly worth trying to minimise your losses as much as possible – after all, if prices of everything rise then any money you have is worth less.
Earlier in the month Mr Lewis was asked about savings accounts – if someone was to put £10,000 in for a year. Mr Lewis said: “You can put money into an easy access account and earn interest on it every day. You won’t be paid it every day – it’s paid by the month and in some cases by the year depending on what you opt for, and you don’t have to put any more in.
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“The only accounts that require you to do that are regular savings accounts and you can’t put lump sumps in there anyway. If you are putting the money in for the year and are not touching it, you will earn far more in a fixed rate account than you would in an easy access account.
“The top easy access account is 2.85 percent from the Coventry Building Society, and the top one-year fixed rate is 4.3 percent. So, if you’re definitely not going to touch it, lock it away in a fixed for a year. If you may touch it, then you can put some in easy access and some in fixed, as none of them require you to put any more money in there.”
Here are the Money Saving Expert top savings accounts currently:
Provider // Rate (AER variable) // Min/max deposit // Unlimited withdrawals? // How to open
Zopa 2.86% // £1/ £85,000 // Yes // App (no joint accounts)
Coventry BS // 2.85% // £1/ £250,000 // No, max six a year or 50-day interest penalty // Online
Cynergy Bank // 2.75% (includes 0.15% bonus for 12 months)// £1/ £1m // Yes // Online
Chip // 3% // Be aware. This is a bonus, not interest, and the interest isn’t FSCS-protected (more info) // £1/ £250,000 // Yes // App (no joint accounts)
The average easy-access cash-savings rate has hit its highest point since January 2009, according to analysis. Savers can now typically get returns of 1.43% with this type of account, financial information website Moneyfacts.co.uk said.
A year ago, in December 2021, the average easy-access savings rate was just 0.19%. Someone putting away £1,000 for a year at 0.19% would get £1.90 in savings interest, but at 1.43% they would receive £14.30.
Finding decent savings returns can help to offset the eroding impacts of high inflation, although at 10.7%, Consumer Prices Index (CPI) inflation is significantly higher than typical easy-access savings rates.
The average rate on savings accounts where notice has to be given to withdraw funds has also increased to 2.26% – the highest rate since December 2008 and the first time it has breached 2% since December 2008 – Moneyfacts said.
The average easy-access Isa on the market pays 1.55% – the highest rate since November 2012. The average notice Isa stands at 2.19% – its highest since February 2009 and the first time the average rate has breached 2% since November 2012. And the average one-year fixed bond rose to 3.51%, to stand at its highest level since December 2008.
Rachel Springall, a finance expert at Moneyfacts, said: “Savings rates are now at their highest levels in over a decade, a significant milestone. In 2021, all average savings rates fell to record lows, so it’s positive to see notable improvements across the savings spectrum this year.
“A combination of reasons has been at play for interest rates to rise at such pace, one being the consecutive base-rate rises by the Bank of England throughout 2022, but also increased competition among challenger banks. Indeed, one area of the market to see rates reach the highest levels since 2008 was one-year fixed-rate bonds, a popular arena for challenger banks seeking savers’ deposits to fund their future lending.”
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