Act now to better your returns!
The decision to keep the Bank of England base rate on hold, for another month at least, will give savers some respite. But for how long? With a strong indication that it may be cut in August, you can't afford to be complacent.
Savers have been genuinely concerned about the possibility of a rate cut from the Bank of England’s Monetary Policy Committee this month, but many are already stuck in poor-paying accounts that would struggle to see interest rates cut any further than they have been.
HSBC and First Direct are two of the worst performers, with HSBC’s Flexible Saver paying just 0.05% and its subsidiary First Direct’s Savings Account paying the same.
But there are also plenty of accounts paying a derisory 0.10% including the Barclays Prime Account, Clydesdale/Yorkshire Bank’s Instant Savings, Halifax's Liquid Gold and Bonus Gold, HSBC’s Flexible Saver – Preferential Rates, the Post Office Online Easy Saver Issue 1 and Santander’s Instant Saver.
When these accounts have names like ‘Liquid Gold’ or ‘Preferential rates’ it really is a case of misleading marketing, when the rates being paid are so small.
We all know that interest rates are low and could go lower, but there really are a lot better deals to be had out there. Savers need to keep a close eye on the marketplace and move when a better rate comes along, otherwise it is easy for the banks to continue taking them for granted. There is no need to be earning so little on your money, even in this low interest rate environment.
If you want to be sure you are getting a better rate for a longer period, there are some good fixed term rates currently available and bagging them before they disappear, could shelter your savings from any base rate decisions for a period of time.”
Some of the top-paying accounts have more than 40 times the interest available on the worst payers out there. For example, Al Rayan Bank has a fixed-term account for 36 months, which is currently paying 2.30% for three years – this is 46 times the interest paid on a 0.05% savings account.
If you do not want to tie your money up for as long, Charter Savings Bank is offering 1.91% for two years on deposits of £1,000.
You can also get significantly higher rates on the High Interest Current Accounts from Nationwide, TSB Bank and Santander, although the amount you can deposit is smaller. For example, you can get 4.89% gross (5% AER) from Nationwide’s FlexDirect Current Account on deposits of up to £2,500 and on the TSB Bank Classic Plus Account, up to £2,000. This is 100 times more than you are paid in the HSBC and First Direct accounts paying 0.05%.
If you have more to deposit, you can get 2.96% gross (3% AER) with Santander’s 123 Current Account on deposits of between £3,000 and £20,000 - although the account comes with a fee of £5 per month to be aware of.
Savings Champion created the Rate Tracker tool to help people stay on the best rates, for life. If you haven't already signed up, this free tool alerts all savers when your existing rates change and recommends the best alternatives should your existing deal be uncompetitive.
You can sign up to the Rate Tracker at www.savingschampion.co.uk.