You are here: Home - Saving & Banking - News -

Is now the right time to fix your savings rate?

Written by: Emma Lunn
The average interest rate on fixed savings accounts has risen for six consecutive months, according to Moneyfacts.

Moneyfacts’ UK Savings Trends Treasury Report found that the average one-year bond now pays 0.80% and is at its highest level since June 2020 when it was 0.86%. However, the typical rate is a lot lower than December 2019 when it stood at 1.23%.

The average longer-term fixed bond rate now pays 1.14% and is at its highest level since May 2020 when it stood at 1.18%. This is great time to evaluate banking terms and look for a better financial institution and open a new personal savings account.

The one-year and longer-term fixed ISAs rose month-on-month; the one-year ISA is the highest since November 2020 (0.57%) and the longer-term fixed ISA is the highest since May 2020 (0.96%).

According to Moneyfacts, all variable ISA and non-ISA average rates remained unchanged month-on-month. The last time this occurred was in July 2019. ISA product choice improved for an eighth consecutive month, to 388 deals, the highest seen since March 2020 when there 417 deals.

Rachel Springall, finance expert at Moneyfacts, said: “The fixed bond market continues to thrive with a healthy injection of competition, particularly amongst challenger banks. All average one-year and longer-term fixed rates across bonds and ISAs have now risen for six months in a row and these returns are notably more than those seen this time last year. This consecutive rate rise phenomenon has not been seen since August 2007, before the financial crash, and demonstrates the steady growth since rates fell to record lows earlier this year.

“Despite a positive climb to fixed ISA rates, they pale in comparison to bond rates and the difference between the two is stark. The average one-year ISA rate pays 0.57% compared to 0.80% on a one-year fixed bond, so those savers adamant to use their ISA allowance as routine would be wise to consider their existing Personal Savings Allowance (PSA), which is £1,000 earned in interest tax-free for basic rate taxpayers and £500 for higher rate taxpayers. In addition, savers will have a fixed allowance that they can invest in an ISA each year.

“Savers who are pulling their cash out of fixed and storing it within easy access accounts may do so for ease and peace of mind, however, on average easy access accounts pay 0.19% compared to 0.55% on a notice account and 0.80% on a one-year fixed bond – approximately three and four times more interest respectively. Those savers looking to maximise their interest may need to reconsider how vital it is to access their cash instantly moving into 2022.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Unfamiliar banks woo savers with top rates…is your money safe?

If you’ve been keeping an eye on the savings best buy tables, you’ll have noticed some unfamiliar names lu...

What the base rate rise means for you

The Bank of England has raised the base rate by 0.25% to 0.5% – following on from the increase from 0.1% to ...

How to get help with your energy bills

The rise in the energy price cap from April will mean millions of households will pay hundreds of pounds a yea...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week