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Easy access rate war sees digital bank deals breach 3%

Paloma Kubiak
Written By:
Paloma Kubiak
Posted:
Updated:
02/02/2023

Chase and Tandem Bank have announced the interest on their respective easy access savings accounts will rise.

Digital challenger Chase – which notched up one million customers in the year since launch in September 2021 – confirmed it will increase the rate on its easy access savings account from 2.7% to 3% AER (2.96% gross) on 13 February.

The Chase saver is linked to Chase’s current account which offers 1% cashback on everyday debit card spending for a year. Customers can also earn 5% AER (4.89% gross) on round-up spends.

US banking giant JPMorgan Chase confirmed savers will be able to deposit up to £500,000 across all saver accounts (maximum of 10 are permitted).

However, savers are urged to be mindful of the £85,000 FSCS deposit protection limit in case of failure.

It comes as the Bank of England today raised the base rate from 3.5% to 4%.

Shaun Port, managing director for everyday banking at Chase, said: “We want to help savers make their money work harder while providing a simple and straightforward way to save. By increasing the rate on our linked saver account, customers can manage and access their savings in a way that suits and supports them in reaching their savings goals.”

Is this market-leading?

Chase has a history of launching market-leading rates and this would be, save for Tandem Bank pipping it to the top spot, with the increase taking effect immediately.

Off the back of today’s base rate hike, Tandem has also reacted by increasing the rate available on its instant access savings account to 3.05% AER.

The ‘green’ digital bank said its underlying instant access savings account pays 2.85% but once combined with its top up rate (0.20% AER variable) launched last month, savers can net 3.05%.

Ben Mitchell, director of savings at Tandem Bank, said: “I’m delighted we can continue to offer a leading proposition for hard working savers across the UK. With interest rates continuing to rise, it’s right that we raise the rates for our customers.

“And, following the launch of our new top up rate, they are further rewarded with a market-leading overall rate of 3.05% on their instant access savings. I’m proud we’re continuing to lay such markers as we look to support banking for a greener future with customers’ savings supporting green lending and initiatives.”