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Savers urged to act now to get the best interest rates

Written by: Emma Lunn
Providers adjusted their deals soon after the inflation figure was announced, with savers urged to go quick to grab a top rate before they start to fall.

Inflation is now at 10.5% according to the Office for National Statistics (ONS). However, there are no savings accounts that can beat, or even match, the inflation rate.

Moneyfacts is urging savers to “act with pace to grab a top rate” before savings providers drop rates further.

Rachel Springall, finance expert at Moneyfacts, said: “Inflation continues to degrade the true spending power of savers’ cash, but this should not deter them from seeking out a new savings deal. Interest rates on some of the top fixed deals have dipped since last month, as savings providers moved to adjust their market positions. 

“Savers will need to act swiftly to grab the latest deals, as more movement is expected over the coming weeks.” 

Where to find the best savings rates

Those savers who are prepared to lock their cash away for a guaranteed return can still find fixed rate bonds and ISAs paying above 4%, where the top rate tables continue to be dominated by challenger banks and building societies.

The best easy access account is currently from HSBC and pays 2.97%, while the best paying notice account is the 120-day notice account from Hinckley and Rugby Building Society which pays 3.6%.

The best one-year fixed rate bond is from Habib Bank Zurich which pays 4.33%, while the top paying two-year bond is offered by FirstSave and pays 4.7%. 

If you’d fixed for two years last month you could have got a better rate from Melton Building Society. It was paying 4.75% on a two-year deal in December 2022.

You can only earn slightly more interest by locking your money away for three years with the best three-year bond which pays 4.71, offered from Investec Bank via Raisin.

Table topping four and five-year bonds currently pay 4.53% and 4.63% respectively, both from UBL UK.

If you want to fix your savings and save your money within an ISA wrapper, the rates are slightly lower. The best one-year fixed rate ISA pays 4% (Barclays), while the best two-year fixed ISA pays 4.11% (Virgin Money).

“Throughout 2022, the overall cash savings market benefited from consecutive base rate rises and competition from many savings providers. Towards the tail end of 2022, however, there was an unprecedented spike in volatility surrounding interest rates and this prompted many savings providers to grab the spotlight within the top rate tables,” Springall said.

She added: “Challenger banks traditionally compete at pace to secure savers’ deposits to fund their future lending on fixed rate bonds, but as the expectations surrounding future interest rate hikes has eased, fixed bond rates have subsequently been cut, and some providers pulled out entirely from the market. There has been a notable rate drop on longer-term fixed savings and this arena could worsen further if consumers prefer shorter-term offers.”

Those savers comparing easy access accounts or ISA equivalents would be wise to check the terms meet their needs, as some accounts restrict withdrawals and lead to a rate drop or closure of the account when any limit is breached.

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