With continued speculation around Brexit and inflation edging downwards, it’s unlikely we’ll be seeing any further rises in the Bank of England base rate anytime soon. To be honest, you could argue that it has made very little difference to the extra interest in your savings accounts anyway, given that so many providers didn’t increase rates at all.
This only goes to highlight the benefits of some rate guarantees for savers on the few accounts that offer them, although some aren’t worth the paper they’re written on. For example smaller provider Dudley Building Society, guarantees that the rate on its Instant Tracker account will not fall to more than 5% below the Bank of England base rate! There are a handful of guarantees which aren’t this bad, but most of these accounts are still not paying the best rates of interest.
So hats off to RCI Bank and Ford Money for offering good value to their existing customers - without the need for a base rate linked guarantee.
Both of these providers' easy access accounts pay a competitive return (although not the very best) but most compelling, is that their guarantee is to match the rate paid for new customers to the rate paid for their existing customers. Essentially it’s one rate for all. Holders of these account have seen a boost to their interest, as competition in the easy access market has heated up and best buy rates are on the rise. We can thank Marcus by Goldman Sachs for the most recent boost in competition.
As it still wants to attract new business, RCI Bank has recently increased the rate on its ever popular Freedom Savings Account from 1.30% gross/AER to now pay 1.37% gross/AER*. And because of their guarantee, this is for both new and existing customers. As we say, not market leading but not far off the best rate.
Similarly, Ford Money currently pays 1.29% gross/AER on its Flexible Saver account*, following three increases over the last year. It increased to 1.17% gross/AER in October 2017, 1.22% gross/AER in January and to today's rate of 1.29% gross/AER from August this year. And existing customers have beneffited from these increases too - rare treatment these days.
As we have found, not all guarantees are worth anything and if the rate becomes uncompetitive then regardless of the guarantee, you may still be getting a poor deal. But those customers with RCI and Ford Money are probably cheering for more competition in the market in the hope their rates will continue to move up - even if the Bank of England base rate does not.
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