Savings expert shares key things you can do to unlock interest rates above 6% | Personal Finance | Finance

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A expert has shared ways people can snap up accounts paying more than six percent interest, despite lenders pulling many of the top deals in recent months.

After three consecutive Base Rate freezes at 5.25 percent, interest rates on savings accounts have been falling week-on-week.

Average easy access savings rates have fallen to around 3.15 percent, while fixed rates are averaging around 4.67 percent according to Moneyfactscompare.co.uk.

Meanwhile, monthly rates dropped to 4.1 percent on average in January, down from 4.6 percent in September last year.

However, people can still bag a six percent rate with some providers, and experts at Money.co.uk have explained where to go.

Money.co.uk’s resident savings expert, Lucinda O’Brien, said: “It’s not a big secret that rates on savings accounts are slowly decreasing. Last year, savings accounts were on a high with rates above six percent on some fixed-rate accounts. But this couldn’t last forever, as the economic climate changed.

“Inflation fell to 3.9 percent in November and the Bank of England continued to freeze the base rate at 5.25 percent. These factors impacted savings rates, and we’ve seen the average monthly rate for savings accounts drop to 4.1 percent in January compared to 4.6 percent in September 2023.

“Looking at the savings account market for all customers, the top interest rate for an easy access account stands at 5.22 percent with Metro Bank’s instant access savings account. Whereas for fixed-rate accounts, Investec has a one-year fixed-rate saver at 5.3 percent.”

While these rates are competitive and will help savers earn some extra money on their cash, Ms O’Brien said people “need to look closer to home” to find the top rates.

She explained: “Big banks like Nationwide, First Direct and TSB are all offering savings accounts with an interest rate at six percent or above.”

However, Ms O’Brien noted: “There’s a catch. These accounts are for existing customers only or for people who decide to switch their current account. Alongside attractive switching offers, banks are also trying to get more customers by offering these higher-rate linked savings accounts.

For example, TSB is currently offering a switching offer of up to £185 with its Spend & Save account. This is an everyday current account with optional features and no account fee.

Ms O’Brien said: “The switching offer allows a customer to earn £125 when they apply for a Spend & Save or Spend & Save Plus account, and there’s an opportunity for up to £60 in double cashback. Remember to read all the terms and conditions before making the switch.”

The good news is that TSB customers will then get access to its monthly saver account. This has an interest rate of six percent which is fixed for one year.

Ms O’Brien said: “You’ll be able to save between £25 and £250 each month via a standing order and there are no withdrawal charges.”

Similarly, First Direct is offering current account switchers £175 cashback when someone switches to its 1st Account and deposits £1,000.

Ms O’Brien said: “This current account then unlocks access to a seven percent regular savings account. This interest rate is fixed for 12 months and you can save between £25 and £300 a month into the account.

“The regular saver is also flexible as you can change the amount you deposit at any time, which works well for different budgeting demands. Plus, although you are restricted with how much you can save each month, the interest adds up – if you save £300 every month for 12 months at this rate, you’ll earn around £136.50 in interest.”

Elsewhere, Ms O’Brien said Nationwide has gone “one step further” in offering its current account members a Flex Regular Saver with an interest rate of eight percent.

She noted: “Bear in mind that this rate is variable, so it could change throughout the year. This regular saver also has some restrictions as you can only save up to £200 a month, and there are only three withdrawals allowed during the year before the interest drops to 2.15 percent. But, if you stick to the rules, this regular saver will certainly maximise the interest on your savings.

“Overall, the accounts mentioned show there are still some good offers within the savings account market, but you’ll need to do your research to get the best deal.

“Plus, there’s never been a better time to save little and often, as this is where the high interest rates can be found. “

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