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Savings accounts paying above base rate at five-year low: who’s offering the best deals?

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17/09/2018
The percentage of savings accounts paying above the Bank base rate has fallen to a five-year low despite two base rate hikes in the past 12 months, a report shows.

Savers had hoped the base rate increases of November 2017 and August 2018 would boost the struggling savings market.

However, the number of accounts paying more than 0.75% fell by 65 in the past month meaning 69% of the market now pays above the base rate, down from 77% in September 2017, the lowest level since January 2013.

The data from Moneyfacts suggests many providers have failed to pass the full – or even any – rate rise on to customers.

Charlotte Nelson, finance expert at Moneyfacts, said: “It is a sorry of affairs that, despite two rate rises from the Bank of England, savers are still not seeing any real improvement in rates. In fact, the average easy access account has only risen by 0.04% since August 2016 and more shockingly, the average easy access ISA has fallen over the last two years (-0.08%).”

The situation is unlikely to improve until all the funding from government schemes – such as the Term Funding Scheme – disappears and bigger banks stop trading off their names and offer savers a decent return, according to Nelson.

However, savers continue to flock to easy access accounts, ploughing £18bn into them since the start of the year, figures from the Bank of England show.

Nelson said: “With a substantial chunk of the easy access market paying less than the base rate, it is likely a large proportion of this cash is sitting in poor-paying accounts.

“Now is not the time for savers to rest on their laurels. In order to achieve a decent return, they must work hard and actively shop around to maximise their interest.”

The best easy access accounts

Coventry Building Society is currently paying the highest easy access rate – 1.40%. But this includes a 0.25% bonus for 12 months and three penalty free withdrawals.

The top paying easy access deal with no bonus is 1.37% from Kent Reliance, which allows unlimited withdrawals.

 

 

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