As end of tax year is fast approching we thought this week we would do something a little different to illustrate just what has changed for savers over the last few years.
Rates on the rise
Our Savings Index looks at the average of our top five best buy accounts in each category over time.
As you can see from the table below, rates have generally fallen since 2013, although things are looking up for savers, with rates clearly going back in the right direction since April 2017.
What is interesting, is how cash ISA rates were better than the non-ISA equivalent a few years ago. How times have changed, but as we have recently reported, the gap is narrowing.
Take a look at our best buy tables to see the current savings accounts that make up our savings index.
Don't accept an average rate
It's a similar story when you look at the average rates on live accounts that are currently available.
It's not just best buy rates that are improving but, unsurprisingly the average rates are much lower than the best buys, which illustrates just how poor some rates are.
For example, did you know that two out of every five easy access accounts are paying less than 0.50% and one out of every five is paying 0.10% or less!
When you think that you can earn up to 1.34% gross/1.35% AER with ICICI Bank UK it just goes to show that it really is worth switching.
On a balance of £50,000 that’s the difference of earning £50 a year, or £675.
More cause for optimism is the clear trend among providers for improved rates on the new issues of their savings accounts.
As you know savings providers have a habit of launching issue after issue of the same account, which means it’s is not always clear which issue you hold and as a result what rate you are earning.
The good news is that in the first quarter of both 2017 and this year, the number of new issues launching with a better rate than the previous issue far outweighs those paying a decreased rate.
But make sure you are clear about which issue you have and the rate you are earning, as you could earn more by simply switching, even just with the provider you are already with.
While we would always advocate switching to a better rate, we appreciate you might not want to be doing this every five minutes. But it does highlight the importance of regular reviews of your savings accounts while rates are rising, to ensure you benefit.
Fixed rate bonds and fixed rate cash ISAs are different, as you often cannot move your money within the term of the account, and even if you can there is likely to be a hefty penalty. But keep an eye out for what’s available when your bond or ISA matures; don’t assume that the rollover option will be a competitive rate, even if it’s higher that your maturing account.
The first quarter of 2016, rates were very much on the decline. Last year things picked up – the first quarter of 2017 was an indication of things to come. Let’s hope that 2018 continues the way it has started.
Of course, we’ll be on hand to keep you updated and to help with any savings needs you have. Call us on 0800 321 3581.
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