The Bank of England increased the base rate in late 2021 from a record low of 0.1 percent. The increase saw many banks and building societies quickly increasing interest rates on the mortgage and debt products, but now savings accounts are seeing the uplift slowly take place as well.
Finance expert at MoneyFacts.co.uk, Rachel Springall, commented on the situation: “The base rate change may take a few months to trickle down to savers who have a variable rate deal, but there is also no guarantee the rate will be passed onto them in full, or at all.
“It remains the case that savers need to act swiftly to take advantage of the best deals and, as some easy access accounts pay as little as 0.01 percent, hopefully this base rate rise will shake any saver’s apathy to look elsewhere. The biggest high street banks are unlikely to be matching base rate on their easy access accounts, so savers would be wise to reconsider their loyalty.”
Many savers are cautious when it comes to switching savings providers due to the record low interest rates they’ve experienced over the past two years and a somewhat bleak future outlook despite the base rate increase.
However, Ms Springall advised that savers should shop around to ensure they are getting the best possible deal and making their money work for them.
“Easy access accounts are a popular option and rates on these deals are the best they have been since the start of the year. Fixed bonds have also improved significantly, and could be a good choice for those wanting a guaranteed return on their savings.
“Getting a better savings deal does not just come down to switching from one account to another, it can mean re-thinking any savings goal and whether access is required in the short-term.
“Regular savings accounts inspire the savings habit, easy access accounts are flexible and fixed bonds are more suited for lump sums. There are also Lifetime ISAs for those looking to buy a home or save in a separate pot for their retirement, the Government will give it a boost.”
Moneyfacts.co.uk shared the best savings account currently on offer across the variety of different account types.
Easy access accounts
These types of savings accounts are one of the most popular in the UK as it gives savers instant access to their funds.
It is generally advised for savers to keep their emergency savings in accounts like this rather than fixed or notice accounts so that they are able to access them when an emergency arises.
The current best offer for a one year fixed rate account is 1.36 percent offered by Investec Bank.
Charter Savings Bank and Raisin UK is providing a 1.51 percent interest rate on their 18 month fixed rate account with QIB UK offering 1.40 percent on their 18 month account.
The best overall fixed rate account is for QIB UK and Raisin UK’s five year fixed term account offering 2.10 percent interest with Monument Bank offering a close 2.05 percent on their own five year fixed term.
Regular saver accounts
Regular savers are similar to easy access accounts as they offer instant access to one’s funds, however, savers must contribute a specified amount each month in order to get the higher interest rates.
Principality BS’s Learner Earner account is currently the best interest rate on the market for regular saver accounts as it offers 2.35 percent annual interest.
Nationwide BS and Newcastle BS are both offering a close second with two percent interest.
ISAs are a unique tax-free form of savings provided that savers don’t contribute more than £20,000 per tax year.
This calculation takes into account the funds one has in all of their different ISAs so savers are warned to not accidentally go over the tax-free limit.
Currently the best ISA interest rate is for a fixed rate ISA which operates similarly to a fixed rate savings accounts.
Skipton BS is providing 1.45 percent interest on their five year online fixed rate cash ISA with Leeds BS offering 1.35 percent on the same product.