🔔 Savings Rate Rundown - latest best buy savings accounts

Savings Rate Rundown

October has seen a number of interesting new accounts hit the shelves, not only new additions to the best buy tables, but also alternative types of account for savers to consider.

United Trust Bank has launched competitive Tracker Bonds that are guaranteed to increase with any rise in the Bank of England Base Rate during the term. Al Rayan Bank has made improvements to its Sharia compliant Fixed Term Deposits and AA Savings has launched new cash ISAs that allow you to split your cash ISA allowance between both variable and fixed rates.

Unusually for the time of year, we have seen a new best buy variable rate ISA launched by West Bromwich Building Society.

There are also new appearances in the best buy tables from Teachers Building Society and Harrods Bank and a re-appearance from FirstSave with its improved 1 year fixed rate bond.

Rates News

United Trust Bank has launched two new Tracker Bonds, which guarantee to pay a specified amount above the Bank of England Base Rate for the term of the bond. The 2 Year Tracker Bond pays 2.25% gross/AER, guaranteed to be 1.75% above the base rate and the 3 Year Tracker Bond pays 2.60% gross/AER, guaranteed to be 2.10% above the base rate. Accounts can be opened online, in branch or by post with a minimum of £500. Funds cannot be accessed within the term, although the interest can be withdrawn annually.

As speculation continues as to when we are likely to see an increase in the Bank of England Base Rate, some savers may be debating whether to tie funds into a fixed rate or stick with a variable rate, in anticipation of an increase. These Tracker Bonds appear to offer the best of both worlds, with a competitive rate that is guaranteed to go up if the base rate increases, catering for those savers caught in two minds. What is particularly impressive about these bonds is that the current interest rate has not been compromised too much, when compared to a standard fixed rate bond. The two year tracker bond sits in the top ten for the term, whereas there is even better news for those looking at the three year bond, as the rate is beaten only by RCI Bank UK (2.70% gross/AER). When deciding on a strategy for cash savings, a balanced portfolio made up of both fixed and variable rates is an effective way of accessing the best rates now, as well as having rates that could go up with a base rate rise and these tracker bonds can form an effective part of that portfolio. If you need help building a portfolio, please call 0800 321 3581 or take a look at our Concierge Service.

Al Rayan Bank has launched new versions of its 18 month, 24 month and 36 Month Fixed Term Deposits for new accounts opened. The 18 Month Fixed Term Deposit pays an expected profit rate of 2.15% quarterly or 2.17% if profit is added to the account and paid on maturity (the previous version was paying 2.00%). The 24 Month Fixed Term Deposit pays an expected profit rate of 2.40% quarterly or 2.42% if profit is added to the account and paid on maturity (the previous version paid 2.30%). The 36 Month Fixed Term Deposit pays an expected profit rate of 2.70% quarterly or 2.73% if profit is added to the account and paid on maturity (the previous version paid 2.60%). Accounts can be opened online, by post or in branch with a minimum of £1,000. Profit can be paid quarterly or on maturity and you cannot access the funds within the fixed term period. Accounts are Sharia compliant and so pay an expected profit rate, rather than a standard interest rate.

These improvements have put Al Rayan Bank right at the top of the market for the respective terms. Both the 18 month and 24 month fixed term deposits are market leading, whereas the 36 month fixed term deposits equals the market leading bond from RCI Bank UK. What sets these accounts apart from standard fixed rate bonds is that they are Sharia compliant and so generate an expected profit rate, rather than a guaranteed rate of interest. As the return is based on profit generated by the provider, there is an element of risk attached, although this is offset by Al Rayan Bank’s assertion that the expected profit rate quoted to its customers has always been achieved, since the bank was founded in 2004. In order to look for higher returns in today’s savings market, you sometimes may wish to consider alternative types of cash savings accounts and Sharia compliant accounts could be considered, as long as you are comfortable with how the return is generated and paid.

Coventry Building Society has increased the rate on its Easy Access ISA from 1.40% to 1.50% gross/AER for both new and existing customers. A fairly competitive rate but falls just short of entering the top 5.

The provider has also launched a new Poppy 3 year fixed rate bond paying 2.35% gross/AER. The provider will give a charitable donation to The Royal British Legion equal to 0.15% of the total balances invested in the bond. 

Whilst there are higher paying three year bonds on the market from the likes of RCI Bank (2.70%) and Al Rayan Bank (2.70% quarterly expected profit rate), this bond gives savers the opportunity to support a charity. With a donation made by the provider to The Royal British Legion, you may be willing to take a lower return for a worthy cause.

West Bromwich Building Society has launched a new WeBSave Easy Saver ISA paying up to 1.55% tax free/AER. The ISA pays 0.75% tax free/AER on balances of £1,000 to £4,999, 1.10% tax free/AER on balances of £5,000 to £14,999 and 1.55% tax free/AER on balances above £15,000. Accounts can be opened online and transfers in from previous ISAs are permitted.

This is a welcome new addition to the variable rate ISA best buy tables, where there has been little activity from providers in the last few weeks. However, the account will not suit everyone, as the rates are uncompetitive for lower balances.

FirstSave has launched a new version of its 1 Year Fixed Rate Bond paying 2.06% gross/AER, replacing the previous version which paid 2.00%. The account entered our best buy table at number three and still remains in the table now.

AgriBank has launched a new version of its 5 Year Fixed Rate Bond paying 3.15% gross/AER. This account replaces the previous version, which was withdrawn in early October, which paid a significantly higher rate of 3.30% gross/AER. From Friday (30th) the rate is market leading. The key point for savers to note is that deposits held with AgriBank are covered by the Malta Depositor Compensation Scheme, not by the UK Financial Services Compensation Scheme (FSCS). This should be carefully considered and you must be comfortable with this before proceeding. For further information, please refer to our FSCS Licence Information Guide or call 0800 321 3581 to speak to one of our expert advisers.

AA Savings has launched a new range of Cash ISAs, the first products launched since the provider became part of the Bank of Ireland. The easy access ISA pays 1.00% tax free/AER, the 1 year fixed rate ISA pays 1.76% tax free/AER and the 2 year fixed rate ISA pays 2.01% tax free/AER. Accounts can be opened online, with a minimum of £100 for the easy access ISA and £500 for the fixed rate ISAs and transfers in from previous ISAs are accepted. Access to funds held in the fixed rate ISAs is allowed on closure or full transfer out only, subject to 90 days loss of interest for the 1 year ISA or 180 days loss for the 2 year ISA. The provider allows savers to put money in one of the interest rate options or split their ISA allowance between the three options.

This is the first set of products to be launched by AA since it became part of the Bank of Ireland UK and there are some competitive deals amongst them. Whilst the situation is fairly straightforward for those opening new accounts, those savers already holding funds with the AA will find that their existing funds would be covered under the Financial Services Compensation Scheme (FSCS) by the HBOS banking licence and new accounts opened would be covered by the Bank of Ireland banking licence, which could be confusing to say the least. Both the 1 and 2 year fixed rate ISAs enter the top five for the respective terms, meaning a first appearance for the provider in the best buys for some time. The easy access ISA is less exciting, with much better options available on the market. Allowing you to split your ISA allowance between the easy access and fixed rate options, means that you are able to fix the interest rate at a competitive level, whilst also retaining access to some of your ISA allowance, flexibility that is welcome in today’s savings market.

Harrods Bank has launched a new 1 year fixed rate bond paying 2.05% gross/AER and a 2 year fixed rate bond paying 2.35% gross/AER. Accounts can be opened by post or in branch, with a minimum of £20,000, but you cannot access funds within the term.

A rare appearance from Harrods Bank in the best buy tables and a welcome one, as it is another alternative provider for savers to consider and a brand name that is well-known, albeit mainly for its department store, rather than its savings products. With a fairly high minimum opening balance requirement, these bonds may not be suitable for everyone, but both accounts are competitively priced in the fixed rate bond market and protected by the UK FSCS.