For this week’s guide, Anna Bowes, savings expert from The Private Office, looks at options for locking your cash away, or accessing it anytime…
We had been expecting to see saving accounts rates fall after the Bank of England cut the base rate to 4.25% last week.
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While that was the case for a lot of fixed-rate bonds, the same can’t be said for easy access accounts, where we saw rates remain pretty stable and, in some cases, rise.
Easy access accounts
The West Brom Building Society increased the rate it is paying on its Four Access Saver (Issue 2) – from 4.4% to 4.65%.
But Bowes says there was a notable casualty, with Chip closing the previous version of its easy access saver, which was paying 4.76%, replacing it with its latest issue paying just 3.25%.
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“This has seen it fall way down the ranks, although those who opened an account before the latest rate cut will continue to enjoy the previous rate – for the time being at least,” she says.
She warns that further falls could also be on the way.
“It’s vital to keep an eye on the interest rates you are earning on your existing savings accounts and switch them if they’re no longer competitive,” she adds.
“As we’ve mentioned before, it’s also important to read all the terms and conditions of any new savings account that you open.
“They often have short-term bonuses or restricted access, which may mean that you don’t earn as much interest as you were expecting, or you cannot access the money when you need it.”
Fixed-rate bonds
While we saw some stability across easy access accounts, it was a different picture for the top fixed-term bond rates.
“Rates were starting to fall before the base rate cut – and it’s continued over the past week or so, albeit still at a trickle rather than a torrent,” Bowes says.
“Competition between providers is keeping things elevated.”
We saw a new provider enter the market this week. Conister Bank introduced a stable of fixed-rate bonds, including its one-year bond which tops the best buy table, paying 4.52% on balances from £5,000.
Fixed-rate ISAs
Bowes says: “It’s the same story with the top fixed cash ISA rates – they are coming down too and there have been some slightly sharper cuts to the top two-year and three-year rates.”
They dropped by 0.13% and 0.15% respectively, to 4.17% and 4.15%.
“Once again, while disappointing if interest rates continue to fall going forward, if you’ve locked in at these rates you may well still be congratulating yourself in the future – for grabbing top tax-free rates while you can,” she adds.
Easy access cash ISAs
Both Plum and Moneybox have withdrawn their previously table-topping accounts, replacing them with accounts paying quite considerably lower rates of 4.80% and 4.81% respectively – down from 5.05% and 5.06%.
But they remain at the top of the chart.
“Once again as with the easy access accounts, a number of the top rates are being offered by financial apps rather than banks (Moneybox, Plum and Tembo) so you need to check which banks each of these financial app providers have partnered with, so that you know where your money is,” says Bowes.
“As mentioned above, there may also be accounts that have restricted access whereby the rate drops if you make more than the allotted number of account of withdrawals and there could be bonuses that last for short periods before the rate you are earning drops sharply.”
