Latest rates rundown - Time to ditch Santander's 123 account?

25th August 2016

What a month it’s been. As providers continue to react to the cut in the Bank of England base rate earlier in the month, there has been little in the way of positive news for savers, with lots of best buy accounts disappearing from the best buy tables and lower versions of accounts being launched in their droves. So don't hang around if you see an account you want.

Perhaps one of the most eye-catching changes in the last few weeks has been the announcement that Santander will cut the interest rate on its popular 123 Current Account from November by up to a whopping 50%.

For those looking for an alternative, there are other High Interest Current Accounts available, with interest rates of up to 5% AER, such as Nationwide’s FlexDirect Current Account and TSB Bank’s Classic Plus Account, albeit on lower balances. But you can often open up multiple, accounts so could build a reasonable lump sum.

In fact, if you're willing to jump through enough hoops, opening multiple current accounts in single and joint names, could see you earning over £1,300 in interest over the year on a balance of £35,000. To learn more, why not give us a call on 0800 321 3581.

However, whilst good news has been few and far between, there have been two providers bucking the trend for offering lower rates recently.

Charter Savings Bank has launched a new market leading fixed rate bond and Bank of London & the Middle East (BLME) has made some improvements to its fixed term deposit range.

Current accounts continue to offer savers some of the very best interest rates available and so, it was no surprise to hear that Santander will cut the interest rate on its popular 123 Current Account. This means that those with balances between £3,000 and £20,000 will see their rate halve from 3% to 1.50% AER from 1st November 2016.

While the size of the cut will come as a shock to holders of the account, the revised rate remains competitive compared to standard easy access savings accounts and there is a cashback facility. But you should also take into account the £5 monthly fee.

However, for those looking for an alternative, there are other High Interest Current Accounts available, with rates far ahead of the best on offer from standard savings accounts. 

Charter Savings Bank has launched a new 1 Year Fixed Rate Bond paying 1.46% gross/AER which went straight into our best buy table in first position. Also released on the same day was an 18 Month Fixed Rate Bond paying 1.50% gross/AER, for those looking for a slightly longer term. Accounts can be opened online with a minimum of £1,000 and you cannot access funds within the term.

It is good to see a provider aiming for the top of the best buy tables and bucking the overall trend in the savings market at the moment. This perhaps gives savers a glimmer of hope that there are providers out there at the moment that are still encouraging people to save with them.

Bank of London & The Middle East (BLME) has increased the rate on offer on its 5 year Premier Deposit Account from 2.00% to 2.20% gross/AER. Accounts can be opened online, with a minimum of £25,000.

Accounts from this provider are Sharia compliant, so they comply with Islamic law but are available to any saver. Sharia compliant accounts pay an ‘expected profit rate’ as an alternative to interest, which is the level of profit paid to the saver by the provider. The provider invests money deposited by savers to generate the profit, so there is an element of risk involved, as the return depends on the performance of the investments made. That said, providers are keen to state that expected profit rates are usually achieved and most providers will allow you to take funds away early, if the expected profit rate is not likely to be achieved.

With rates that are competitive when compared to standard savings accounts, Sharia compliant accounts are worth considering, as long as you are comfortable with how the return is generated and paid. It is also worth looking at the provider’s track record in achieving profit rates in the past. Always ensure that providers are covered by the Financial Services Compensation Scheme (FSCS) and keep within the protection limits, if you have any concerns.

For more information on the top-paying Sharia compliant accounts at the moment, take a look at our Best Buy Table and if you need any further information, give us a call on 0800 321 3581.

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