Now easy access rates are forecast to hit 3.75%: As the battle for customers steps up, here's where to find the best deals for your savings
- Banks under pressure to increase interest rates after last week's base rate hike
- Coventry BS is set to raise the rate on its top online easy-access account to 3.6%
- Big banks are still dragging their heels as theykeep record profits for themselves
By Sylvia Morris For The Daily Mail
Published: | Updated:
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Savers are in line for big boosts to interest rates on easy-access accounts, experts say.
These deals are tipped to be the main battleground as banks fight for savings customers.
Building societies and smaller banks have already announced a fresh round of interest rate increases in the coming weeks and easy-access rates are expected to rise as high as 3.75 per cent.
Pressure has ramped up on banks to increase interest rates after the Bank of England pushed up base rate from 4.25 per cent to 4.5 per cent last week.
This marked its 12th base rate increase in 18 months — the sharpest rise since 1989.
Easy access: Building societies and smaller banks have announced a fresh round of interest rate increases in the coming weeks and rates are expected to rise as high as 3.75%
Kevin Mountford, from savings platform Raisin, says: 'Savers want to keep their money close at hand and you can expect rates to end up north of 3.5 per cent and as high at 3.75 per cent.'
Savers are less likely to see large increases to fixed-rate accounts. This is because savings providers believe last week's base rate rise could be one of the last and rates could even fall in the coming months.
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HOW THIS IS MONEY CAN HELP
- Can you find a better savings rate? Check our independent best buy tables
Chip, the app-based savings account, raised its rate earlier this month to a top 3.71 per cent in anticipation of the Bank of England's move.
Yesterday GB Bank pushed up the rate on its Easy Saver to 3.7 per cent while Ford Money's rate is up from 3.45 per cent to 3.6 per cent. Cambridge BS is raising the rate on its Your Saver easy-access account to 3.5 per cent today.
Yorkshire BS rates go up from today by 0.25 percentage points in line with base rate. Its branch-based Access Saver Plus Issue 7 will pay 3.05 per cent and its Internet Saver account between 3.25 per cent and 3.5 per cent depending on how much is in your account.
At Coventry, rates will tick up on June 1 by up to 0.25 points. Its top easy-access rate on the Limited Access Saver (Online) account will be 3.6 per cent.
Rates at Skipton rise this month too with its Branch Tracker Issue 4 up from 3.15 per cent to 3.4 per cent. Its other variable savings rates will increase 0.25 points from Monday.
But Britain's biggest banks are still dragging their heels.
Rates are unlikely to match any rise in base rate with the large banks, the Treasury Committee, a group of influential MPs, has warned.
This is because big banks are keeping record profits for themselves by increasing rates on mortgages and loans but not savings accounts.
Earlier this year, the big four — Barclays, Natwest, HSBC and Lloyds Banking Group — got a dressing down from the Treasury Committee for failing to pass on base rate rises to their savers.
They pay between 0.7 and 1.3 per cent on easy-access accounts — less than half the rate of smaller competitors.
That is despite base rate rising by 4.4 percentage points from 0.1 per cent in December 2021. During that time, the High Street banks have passed on as little as 0.69 points.
Savers with £10,000 in one of these will earn £70 a year in interest, compared with £371 with Chip, £370 with GB Bank or £365 with Shawbrook Bank.
Harriett Baldwin MP, chair of the Treasury Committee, is urging savers to find better deals by switching accounts. She says: 'This will drive the banks to increase their currently measly rates.'
The big banks do pay well on some accounts, but these tend to come with terms and conditions you must obey to earn the headline rate.
For example, Barclays pays 5.12 per cent on its Rainy Day Saver account but only on the first £5,000 saved in the account.
NatWest pays 6.17 per cent to current account customers opening its Digital Regular Saver on savings of between £1 and £150 a month, but again only on balances up to £5,000.
Any savings over £5,000 earn you 1per cent with NatWest and just 0.7 per cent with Barclays.
Others showcase higher rates but these usually only last for a year.
Your money is then automatically shifted into another account where the rate can be as little as 0.7 per cent.
For example, Halifax Reward Bonus currently pays 3 per cent. But once you have been in the account for 12 months you are moved to Instant Saver, which pays just 0.9 per cent.
How to find the best savings rates
Savings rates are on the rise after many years in the doldrums, with savers now able to bag deals above 4 per cent.
But many people still have money languishing in old sub-1 per cent paying savings accounts.
Checking top rates is essential, but can also possible to make life easier to manage your savings pots in one place.
Over the past few years a number ofsavings platforms have launched, offering savers the option to switch as and when better deals become available and manage accounts from different banks and building societies.
They each work slightly differently and include their own exclusives. To find out more and check out what's on offer visit our specialsavings platform top rates tables.
You can also view our comprehensive best buy savings tables, independently curated by savings guru Sylvia Morris and the This is Money team.
> Compare best savings rates in our tables
> Check the best rates from savings platforms
> Sign up to Savings Alerts to get top deals sent to you
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