Savers thinking of switching accounts have been encouraged they may be able to get a better interest rate with a certain type of account.
Jeremy Cox, head of Strategy at Coventry Building Society, has suggests looking at fixed rate accounts as an option.
He stated: “If savers don’t need immediate access to their funds, then fixed-rate savings and bonds often offer better interest rates than easy-access savings accounts.
“Savers can consider locking their money for one to five years to secure a guaranteed rate of return, but they need to be mindful of withdrawal charges if accessing cash early.”
Currently, Coventry Building Society offers a fixed-rate ISA and a fixed-rate bond, both with an interest rate of 3.9 per cent.
According to moneyfactscompare.co.uk, you can get rates up to 4.77 per cent on one-year fixed-rate bonds and up to 4.53 per cent with a one-year fixed cash ISA.
Mr Cox also highlighted regular saver accounts as another option for those seeking a better rate. He explained: “Many banks and building societies offer these accounts, which often require a set monthly amount to be deposited over a one-year period.
“Coventry Building Society’s Regular Saver offers a highly competitive rate of 4.75 per cent and can be opened by anyone with as little as £1, and there’s no requirement to save every month.”
The building society also offers a Loyalty Seasonal Saver at 6 per cent to those who have had a Coventry Building Society, ITL or Godiva account continuously since January 1, 2024.
The savings expert also said it’s a good idea to use comparison websites, to find the most competitive account that best suits your needs.
Coventry Building Society has a free comparison tool to compare rates across a range accounts. Mr Cox also reminded people of the upcoming deadline to max out their ISAs.
A person can save up to £20,000 a year in ISAs, with no tax on interest or investment growth within an ISA. The expert said: “Cash ISAs can provide better rates than regular savings accounts, and the tax-free benefit is a great way to boost savings. There’s still a few months left to take full advantage of this tax year’s £20,000 limit for 2024/2025 before the allowance resets on April 6.”
Children can save up to £9,000 a year into a Junior ISA, with Coventry Building Society currently among the top payers with its 4.5 percent account.
Those in the market for a new savings account may be anxious to act now before any further reductions in the base rate from the Bank of England.
Mr Cox has shared his insights on the base rate for the coming year, stating: “Both markets and the Bank of England expect interest rates to fall in 2025 to support economic growth and employment, but only if inflation remains within the one to three percent target range.
“Wage and services inflation is remaining stubbornly high, so economists expect that the Bank of England will be cautious, perhaps making a 0.25 percent cut at every other meeting in 2025 with rates falling to around 4 percent by the end of the year.”
He also indicated that this could lead to a decrease in variable mortgage and savings rates throughout the year. He elaborated: “The expectations of falling rates is already largely baked in to fixed-rate mortgage pricing, with five-year fixed rates currently lower than both two-year and variable rates.”
For those soon to remortgage, he issued this further warning: “Borrowers remortgaging in 2025 will need to decide whether they want the certainty of fixing their payments over the longer term, or taking a short-term or variable rate mortgage in the hope that rates will fall further.
“We recommend speaking to an independent mortgage advisor who will be able to set out the available options.”
