Consecutive Base Rate rises have sent interest rates on savings accounts soaring to some of the highest levels seen in decades.
While it remains that not one account currently outpaces the UK’s inflation rate, now resting at 7.9 percent and eroding money purchasing power, this may not be the case for long with analysts predicting a drop to 4.7 percent by the end of the year.
Savers are being urged to “move quickly” to cash in on the higher interest rates now to avoid any future “disappointment” of missing out if the Base Rate is to lower.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “Inflation impact should not discourage savers from searching and switching to a better deal, as if they fail to do so, they could miss out on an attractive rate.
“Top rates across the savings spectrum have improved since the last inflation announcement and more improvements may well surface in the coming weeks if providers consider the latest Base Rate rise and volatility surrounding future interest rate expectations. The savings market overall has come a long way from the record low returns seen in 2021.”
Ms Springall says the one-year fixed bond arena is currently taking “centre stage” for rate volatility as providers have been keen to boost interest rates to grab a prominent position in the top rate tables.
Several providers now offer interest rates as high as six percent to savers who are prepared to invest their money for at least a year.
Ms Springall said: “Those savers who have a maturing one-year fixed bond may well realise the rates are more than double the top rates offered a year ago.
“This area of the market is brimming with challenger banks, and they traditionally move quickly to attract deposits to fund their future lending. Savers will have to move quickly to grab a top rate from such a volatile market.”
For one-year fixes, Vanquis Bank is currently offering the top rate of 6.15 percent, while Investec Bank plc is topping the table for both two and three-year fixes with rates of 6.24 percent and 6.44 percent on its accounts offered through Raisin UK.
Two years ago, the top-rate easy access accounts paid just 0.5 percent, but there are now a variety of deals that pay more than four percent.
Ms Springall said: “These accounts may be more suited to those savers who want flexibility and peace of mind that they can gain access to their cash quickly. However, it’s vital consumers carefully check the terms and conditions of every account, as some can restrict withdrawals.”
According to Moneyfacts, Chip is currently taking the top spot for easy access savers with an Annual Equivalent Rate (AER) of 4.51 percent.
Ms Springall added: “The ISA equivalents are also improving, which is ideal for those who want to use their ISA allowance.”
Principality BS is topping the table of easy access ISAs with an AER of 4.2 percent, followed by Shawbrook Bank’s Easy Access Cash ISA (Issue 25) with an AER of 4.15 percent.
For fixed term ISAs, NatWest is topping the tables for both one and two-year accounts with AERs of 5.7 percent and 5.9 percent, respectively.
Virgin Money is currently offering the highest rate for three-year fixed term ISAs with an AER of 5.55 percent.
Ms Springall said: “Savers will need to consider both their short-term needs and long-term goals when comparing the variety of accounts on the market. It is imperative they sign up to rate alerts and newsletters to keep on top of the latest changes to surface and move quickly to secure a deal to not be left disappointed.”
