The good news is that we are starting to witness more competition coming back in to the market, driving savings rates up for the first time in a long time. Our index of the average best easy access accounts is at its highest level since December 2013, with accounts such as RCI Bank UK paying a market leading 1.65% gross/AER.
In order to guarantee a rise in your savings rates, you need to be active and be prepared to switch accounts when necessary. Savings Champion offers savers two ways to achieve this;
- Rate Tracker – our free online tool that helps monitor rates for you.
- Concierge – our savings account management service, where a dedicated adviser will guide you each step of the way and help set and monitor accounts for you.
For those savers who still have savings languishing in accounts with one of the high street banks, but want to benefit from greater interest, it is highly likely that you will have to switch and in all likelihood to one of the ‘challenger banks’. For some savers, there is still a view that the high street banks somehow represent less risk, although increasingly more savers realise this is an outdated concept. To help provide more information on challenger banks, Savings Champion has produced the following guide - Challenger Bank Guide.
Why the increased competition?
Industry insiders have been giving their biggest hints yet that they believe a rise in base rate, the first in 8 years, is coming and we need to be prepared.
Recently Professor Miles, one of the nine strong rate setters on the Monetary Policy Committee (MPC), told the BBC that the time to raise the bank rate from its current historic low of 0.50% was “coming”. He said “I don’t think it’s anything to worry about, it’s a sign of health”.
This is following the minutes from August’s MPC monthly rate setting meeting, during which one of the nine members voted for a rise in the base rate; the first time this year it hasn’t been a unanimous decision to keep rates on hold at 0.50%.
Although the Governor of the Bank of England, Mark Carney, will not be drawn on exactly when a rise will come, he stated that he believes that “the decision as to when to start such a process of adjustment will likely come into sharper relief around the turn of the year”.
It’s been so long since a rise in savings rates has occurred that even seasoned savers may have forgotten just how quickly providers can get back to their old tricks. After more years than we’d care to remember of monitoring savings rates, we haven’t forgotten the tactics providers can use to widen margins and ultimately try and pay less to loyal savers. It’s unlikely that all providers will in fact pass on the full increase across the board, to all savers, when rates do finally rise. Worst still, with over 3,600 rate cuts to existing savers in the last 3 years, even without any changes in the Bank of England base rate in over 6 years, it’s clear that the link between the base rate and savings rates has widened.
We’ve been stressing this point for some time and you may have read our recent comments on this in the Financial Times and the Daily Mail. Read here how we made one client over £2,600 in additional interest, even after tax and our fee.
The only way to guarantee you’ll always improve your rate now and following a base rate rise is to keep a close eye on your savings and switch to the best paying accounts, especially if your provider doesn’t play fair and increase your rate, when the base rate does finally go up.
If you wish to speak to one of our advisers for a complimentary review of your savings please feel free to call us on 0800 321 3581 or email [email protected]. We want to help all savers to maximise their interest and ensure their money is protected.