This 5.18% savings account may now be UK’s best buy as rival banks pull deals | Personal Finance | Finance

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Many top deals are only available for a few weeks or even just a matter days as providers pull them after being swamped by demand from savers avid for a market-leading interest rate. Savers who have tried opening an account in the past year often find it has closed to new business by the time they have applied, new research from Investec Bank shows.

This leaves them frustrated as they are unable to cash in on a top rate before it has gone for good.

Over the past 12 months, more than 23 million have moved their savings to rival accounts paying better rates of interest, said David Hunt, head of retail savings at Investec. “With so much money moving around, many of the best-buy savings accounts have not remained open for long, leading to savers missing out.”

The Bank of England’s monetary policy committee (MPC) meets tomorrow but few expect it to cut base rates from today’s 16-year high of 5.25 percent.

Consumer price inflation fell from 3.4 percent in to 3.2 percent in March, but that is still above the Bank’s two percent target.

However, inflation is expected to fall sharply in April, due to the cut in Ofgem’s energy price cap, and this could drag inflation the BoE’s target.

In that scenario, the MPC would come under relentless pressure to cut rates when it next meets on June 20. Banks and building societies are likely to start trimming rates further in anticipation, leading to even more best buy deals being pulled.

Today, savers can still get more than five percent a year from a table-topping easy access account, but there are signs rates are sliding.

Oxbury Bank pays 5.02 percent on easy access at time of writing, with Monument Bank paying 5.01 percent and Paragon paying five percent. 

Investec’s Online Flexi Saver pays 4.70 percent.

These are good rates, but just a few weeks ago, savers could get up to 5.20 percent.

Also, the moment the Bank of England does cut interest rates, these rates will drop, too.

For those willing to tie up their money, Investec Bank’s Fixed Rate Saver pays five percent over a one-year fixed term. It pays 4.60 percent a year for two years and 4.40 percent over three years. Savers must have a minimum balance of £5,000. The maximum is £250,000.

Elsewhere, SmartSave’s one-year fixed-rate bond pays 5.18 percent for one year, comfortably one of the highest rates on the market right now. The account is only available online and savers need a minimum deposit of £10,000.

RCI Bank UK pays 5.05 percent fixed for two years.

Five-year fixed rate savings bonds typically pay lower rates but may suit savers who are able to tie up their cash in return for a long-term guaranteed rate.

SmartSave currently pays 4.58 percent, Shawbrook pays 4.57 percent and Hodge Bank pays 4.56 percent.

These rates have stabilised as markets now expect interest rates to stay higher for longer, with hopes of six rate cuts in total across 2024 now dashed.

That is bad news for mortgage borrowers but a relief for savers, as they are finally getting a good deal on their money after years of near-zero returns.

That is increasingly an inflation-busting return, too. However, to get a really good deal, savers should act fast. Rates are highly unlikely to rise from here, but could soon fall.

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