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Challenger bank battle heats up as Atom raises rates

Paloma Kubiak
Written By:
Paloma Kubiak

Challenger Atom Bank has increased rates on four of its fixed savings products, trumping the previous best buys, and helping shake up the suppressed market.

The mobile-only bank now pays 2.00% on its 1 year Fixed Saver, up from 1.50%.

It pays 2.10% on its 2 year product, up from 1.65%, and 2.20% and 2.40% on the 3 and 5 year bonds, up from 1.75% and 2.05%.

The rate rises come days after fellow competitor Charter Savings Bank unveiled market leading savings rates on four of its fixed rate bonds.

Atom said it is able to offer better interest rates due to its purely digital structure which allows it to operate a lower cost model.

Tom Adams, head of research at independent savings adviser, Savings Champion, said: “Since the launch of its savings accounts in April 2016, Atom Bank has consistently offered competitive rates, shaking up the rest of the savings market, while also getting its name more well-known to savers. The combination of being a newer name in the market and its app based applications, means that Atom Bank has to persuade those savers that are wary to give them a try and market-leading rates are arguably the most effective way of doing this.”

Adams said this competition will be music to the ears of savers, giving them encouragement that better rates may be just around the corner.

“Hopefully, this is just the start and we will see providers reacting again to this move from Atom Bank to push rates up even further,” he said.

It has been a headline-grabbing week for Atom Bank with reports suggesting popstar Will.i.am has landed a £4m stake in the firm.