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Cash savings rates edge up but go quickly as base rate cut on the way

Cash savings rates edge up but go quickly as base rate cut on the way
Paloma Kubiak
Written By:
Posted:
02/07/2024
Updated:
02/07/2024

Interest rates on cash savings accounts have nudged up over the past month, largely led by positive movements in tax-free ISAs. But an imminent base rate cut will reverse this trend, with savers urged to bag inflation-busting deals now.

Leaving your cash languishing in a low-paying savings or current account means you could be missing out on valuable interest from higher rates.

Given the lingering effects of the cost-of-living crisis and with inflation finally at its 2% target but forecast to rise later this year, Brits will see their spending power dampened. All in all, it’s more important than ever to make every penny count.

Savings interest rates had been rising off the back of 14 consecutive Bank of England base rate hikes before the bank paused its rate-hiking cycle, leaving it to stand at 5.25%. It has now been frozen at this level seven consecutive times, with savers hoping the delay to a cut will mean slightly higher interest rates, while borrowers remain frustrated over higher rates on mortgage and loan repayments.

Anna Bowes, co-founder of Savings Champion, says: “It’s really interesting that rates have gone up over the past month, and the reason is because the expected rate for the base rate cut keeps being pushed back.”

Bowes adds: “It’s ISA rates that have been the most competitive, with fixed-term accounts driving rates up. This is good news as it’s narrowing the gap between fixed rate bonds and cash ISA bond rates.

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“This also means that for those who have not used their ISA allowance, there’s more choice to do so. And really, you may want to do this as soon as possible, because as soon as you open an ISA, you start earning tax-free interest.

“Even though longer-term rates are lower than short-term deals, there has still been positive activity. But this illustrates that the market is anticipating a base rate cut in the next few weeks or months. Providers don’t want to pay more than they need to over the long term. So, if you can put money away for a while, you could get an inflation-busting interest rate for longer, which you’ll be very pleased about.”

EASY-ACCESS ACCOUNTS

5.2% Ulster Bank Loyalty Saver – minimum deposit £5,000. Apply and access in branch, online, mobile banking and phone. Available to existing Ulster Bank customers who hold a current account. Interest drops to 2.25% below £5,000 balance.

5.07% Flagstone Instant Access (provided by SmartSave) – minimum deposit £10,000. Apply and access online. This account is available exclusively through the Flagstone Investment Management platform.

5.02% Oxbury Easy Access Account (Limited Edition 1) – minimum deposit £20,000. Apply and access online. If the balance falls below £20,000, no interest will be paid.

4.94% Cynergy Bank Online Easy Access Account (Issue 78) – minimum deposit £1. Apply and access online. Rate includes a 1.19% bonus for the first 12 months.

4.91% Paragon Double Access Account Issue 8 – minimum deposit £1,000. Apply and access online. Upon third withdrawal within an account year, the rate decreases to 1.5% AER/annual (1.49% monthly).

NOTICE ACCOUNTS

5.37% OakNorth 95 Day Notice Base Rate Tracker Account (Issue 2) – minimum deposit £1. Apply online, or via mobile, access via email, mobile banking, online or by post. Withdrawals are subject to 95 days’ notice; no earlier access is allowed. The interest rate tracks the Bank of England base rate. Interest is calculated on the minimum daily balance and applied to the account on the first day of every subsequent month.

5.35% Vanquis 90 Day Notice Account (Issue 5) – minimum deposit £1,000. Apply online, access online, by phone or via post. Withdrawals are subject to 90 days’ notice; no early access is allowed. Interest is paid monthly or on maturity.

5.3% Vanquis 60 Day Notice Account (Issue 1) – minimum deposit £1,000. Apply online, access online, by phone or via post. Withdrawals are subject to 60 days’ notice; no early access is allowed.

5.27% Monument 60 Day Notice Account – minimum deposit £25,000. Apply and access online. Variable interest. All withdrawals are subject to the 60-day notice period.

5.25% Investec 90-Day Notice Saver – minimum deposit £5,000. Apply and access online. Withdrawals are subject to a 90-day notice period. Interest paid monthly on the 15th.

ONE-YEAR FIXED TERM BONDS

5.25% Raisin 12 Month Fixed Term Deposit (provided by Mizrahi Tefahot Bank Ltd) – minimum deposit £1,000. Apply online. No access within the term. This account is available exclusively through the Raisin UK Savings Marketplace.

5.24% SmartSave 1 Year Fixed Rate Saver – minimum deposit £10,000. Apply online. No access within the term. Interest is paid on maturity.

5.23% Cynergy Bank 1 year Fixed Rate Bond – minimum deposit £1,000. Apply online, access online or by phone. No access within the term.

TWO-YEAR FIXED TERM BONDS

5.06% Cynergy Bank 2 year Fixed Rate Bond – minimum deposit £1,000. Apply online, access online or by phone. No access within the term.

5.06% Close Brothers Savings 2 Year Fixed Rate Bond – minimum deposit £10,000. Apply online, access online or by phone. No access within the term.

5.05% Cynergy Bank 15 Months Fixed Rate Bond – minimum deposit £1,000. Apply online, access online or by phone. No access within the term.

THREE-YEAR FIXED TERM BONDS

4.95% Market Harborough BS Fixed Term Bond 35 (31/08/2026) – minimum deposit £10,000. Apply online or in branch. No access within the term.

4.81% Birmingham Bank 3 Year Fixed Rate Bond (Issue 7) – minimum deposit £1,000. Apply online. No access within the term.

4.81% Cynergy Bank 3 year Fixed Rate Bond – minimum deposit £1,000. Apply online, access online and by phone. No access within the term.

FIVE-YEAR FIXED TERM BONDS

4.6% United Trust Bank 5 Year Bond – minimum deposit £5,000. Apply online, access via email, online, post and phone. No access within the term. This account is available exclusively through the Raisin UK Savings Marketplace.

4.58% Hodge 5 Year Fixed Rate Bond (Online only) – minimum deposit £1,000. Apply online, access online and by phone. No access within the term.

4.57% Shawbrook 5 Year Fixed Rate Bond (Issue 49) – minimum deposit £1,000. Apply online, access via email, online and phone. No access within the term.

VARIABLE RATE CASH ISAS

5.17% Plum Cash ISA – minimum deposit £100. Apply and access via mobile app. The rate of 5.17% AER includes a bonus of 0.88% for the first 12 months, providing the following conditions are met: The account balance is kept at £100 or more and you have no more than three withdrawals in a single year. A fourth withdrawal or your balance dropping below £100 will result in the interest rate dropping to 3% AER. Transfers of existing ISA funds are allowed, but these receive the basic rate of 4.29% AER. The basic rate of interest of 4.29% is paid monthly, and the Plum bonus rate of 0.88% will be added at the end of the first year. This is not a flexible ISA.

5.1% Chip Cash ISA – minimum deposit £1. Apply and access via mobile app. Transfers in are not accepted currently. This is a flexible ISA. This savings account is powered by the provider’s partner, ClearBank Limited. ClearBank Limited is covered by the FSCS, so funds deposited are protected up to £85,000 subject to eligibility.

5.08% Zopa Easy Access ISA – minimum deposit £1. Apply and access via mobile app. Rate includes a 0.5% AER bonus that runs for one year after opening. Transfers in are accepted. This is a flexible ISA.

5.05% Progressive BS 1 Year Double Access Cash ISA Account (Issue 3) – minimum deposit £500. Apply and access in branch or by post. Two penalty-free withdrawals allowed per tax year. Additional withdrawals are allowed subject to the account reverting to an instant-access cash ISA. Transfers in allowed. Interest is paid annually.

5% Newcastle Building Society Single Access ISA (Issue 1) – minimum deposit £1. Apply online or in branch, access online, in branch, by post or phone. One withdrawal allowed on each anniversary year. The rate drops to 2.9% for second or subsequent withdrawal. Transfers in are allowed. This is a flexible ISA.

ONE-YEAR FIXED TERM CASH ISAS

5.05% Virgin Money 1 Year Fixed Rate Cash ISA Exclusive (Issue 13) – minimum deposit £1. Apply online or in branch. You need to have a current account with Virgin Money that was opened on or after 4 December 2019, or you originally opened your current account with Clydesdale Bank, Yorkshire Bank or B. The maturity date is 30/06/25. Full and partial withdrawals are permitted during the term, but you will be charged 60 days’ interest on the amount taken out.

4.94% Cynergy Bank 1 year Fixed Rate Cash ISA – minimum deposit £500. Apply online, access online, post or phone. Access on closure only, subject to 180 days’ loss of interest. Transfers in are allowed. This is not a flexible ISA. This is not a portfolio ISA.

4.93% Shawbrook 1 Year Fixed Rate Cash ISA Bond (Issue 100) – minimum deposit £1,000. Apply online, access online, by post and phone. Withdrawals are allowed, subject to 90 days’ loss of interest. Transfers in are allowed. This is not a flexible ISA. This is not a portfolio ISA.

TWO-YEAR FIXED TERM CASH ISAS

4.68% Cynergy Bank 2 year Fixed Rate Cash ISA – minimum deposit £500. Apply online and access online, by post or phone. Access on closure only, subject to 180 days’ loss of interest. Transfers in are allowed. This is not a flexible ISA. This is not a portfolio ISA.

4.67% Secure Trust Bank 2 Year Fixed Rate Cash ISA (12/08/26) – minimum deposit £1,000. Open online, access online, via app or by phone. Withdrawals allowed upon closing the account. If you decide to close the account before it matures, Secure Trust makes an ‘early-access charge’ of 180 days’ interest. The maturity date is 30 July 2026. Transfers in are accepted. This is not a flexible ISA.

4.67% United Trust Bank Cash ISA 2 Year Bond – minimum deposit £5,000. Apply online, manage online, by post or phone. Withdrawals are allowed, subject to a withdrawal charge equivalent to 180 days’ interest. Interest can be withdrawn annually without penalty. Transfers in are allowed. This is not a flexible ISA. This is not a portfolio ISA.

THREE-YEAR FIXED TERM CASH ISAS

4.6% Principality BS 3 Year Fixed Rate Cash ISA (Issue 344) – minimum deposit £500. Apply online, access online, in branch and by post. Access on closure only, subject to 270 days’ loss of interest. Transfers in are allowed. This is not a portfolio ISA. This is not a flexible ISA.

4.56% Cynergy Bank 3 year Fixed Rate Cash ISA – minimum deposit £500. Apply online, manage online, by post and by phone. Access on closure only, subject to 180 days’ loss of interest. Transfers in are allowed. This is not a flexible ISA. This is not a portfolio ISA. Interest is paid annually.

4.55% United Trust Bank Cash ISA 3 Year Bond – minimum deposit £5,000. Apply online, manage online, by phone or by post. Withdrawals are allowed, subject to a withdrawal charge equivalent to 270 days’ interest. Interest can be withdrawn annually without penalty. Transfers in are allowed. This is not a flexible ISA. This is not a portfolio ISA.

FIVE-YEAR FIXED TERM CASH ISAS

4.25% Principality BS 5 Year Fixed Rate Cash ISA (Issue 345) – minimum deposit £500. Apply online or in branch, access in branch, by post and online. Access on closure only, subject to 360 days’ loss of interest. Transfers in are allowed. This is not a portfolio ISA. This is not a flexible ISA.

4.2% United Trust Bank Cash ISA 5 Year Bond– minimum deposit £5,000. Apply online, manage online, by post or phone. Withdrawals are allowed, subject to a withdrawal charge equivalent to 365 days’ interest. Interest can be withdrawn annually without penalty. Transfers in are allowed. This is not a flexible ISA. This is not a portfolio ISA.

4.17% Close Brothers Savings 5 Year Fixed Rate Cash ISA – minimum deposit £10,000. Apply online, access online or by phone. Access on closure, subject to a 365-day interest penalty. Transfers in are accepted.

Rates correct as of 2 July 2024