This week's savings news

21st November 2016

It has been a quiet period overall for activity in the savings market, as providers appear to be holding a collective breath, ahead of this week’s Autumn Statement. However, there are a small number of providers that are making waves in our best buy tables.

Following an absence from our best buys, Tesco Bank is back with a new easy access account that is beaten only by RCI Bank and NS&I and new fixed rate bonds which appear in our best buy tables, including a market leading rate.

Also making improvements to its fixed rate bond range was Hampshire Trust Bank, with one of the new accounts a joint market leader.

Finally, fixed rate cash ISAs have received a boost with the return to the best buy tables of Virgin Money.

Tesco Bank has made a number of improvements to its savings range. The new easy access internet saver is paying 0.91% gross/AER (the previous version paid 0.66%) and can be opened online with £1. The interest rate includes a 0.51% bonus for the first 12 months.

It is encouraging to see Tesco Bank back in the easy access market, with a significantly improved offering. Whilst better rates are available from the likes of RCI Bank and National Savings & Investments, which are both paying 1% gross/AER, nevertheless it is a step in the right direction.

The provider has also made improvements to its fixed rate bond range, with the new versions of the 2 year (1.52% gross/AER), 3 year (1.62% gross/AER) and 4 year (1.64% gross/AER) bonds, all appearing in our fixed rate bond best buy tables. Accounts can be opened online with a minimum of £2,000. A monthly interest option is available for those who prefer it and interest must be paid to a separate account.

Having not appeared in our fixed rate bond best buy tables for a while, it is good to see Tesco Bank back with improved interest rates. The pick of the bunch is the 3 year fixed rate bond, which tops our table, though both the 2 year and 4 year bonds are both in the top five. You should be aware that interest must be paid into a separate account, so you cannot benefit from compounded interest, something you should consider carefully before proceeding.

Also making improvements to its fixed rate bond range was Hampshire Trust Bank. The new 1 year bond pays 1.10% gross/AER, the 2 year bond pays 1.30% gross/AER, the 3 year 1.55% gross/AER and the 5 year bond is paying 1.95% gross/AER. Accounts can be opened by post, with a minimum of £1,000.

Of the improved rates, the 3 year and 5 year are the most eye-catching, with both bonds appearing in our best buy tables. In fact, the 5 year bond is now the joint market leading rate alongside both Paragon Bank and Close Brothers Savings. Moves like this keep competition alive in the savings market and the more providers that join the race the better, as it will push interest rates back in the right direction.

Finally, Virgin Money has made some positive moves in the Fixed Rate Cash ISA market. New 1 year (1.00% tax free/AER) and 3 year (1.25% tax free/AER) fixed rate ISAs now appear in the respective best buy tables. Accounts can be opened online, in branch or by post with a minimum of £1 and transfers in of previous ISAs are allowed. Unusually for fixed rate cash ISAs, withdrawals are allowed, although a penalty of 60 days’ loss of interest for the 1 year or 120 days’ loss for the 3 year ISA would apply.

Having been a regular in our best buys, these launches end an unusually quiet time for the provider. Improvements to cash ISAs are always welcome, as many providers continue to neglect this part of the savings market. The accounts themselves are flexible, allowing transfers in of previous ISAs and withdrawals and hopefully we will see more best buys from this provider in the coming days and weeks.

If you need any help with your savings or would like to discuss further options, please call us on 0800 321 3581, we'd love to hear from you.

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