Another model is emerging in the savings world – and it could be very beneficial to savers.
As you might expect, the rates for simple accounts are going down, after the Bank of England the base rate was cut from 5 to 4.75 percent last month.
But rates on another type of loan remain the same – or may rise. This growth division opens up a great opportunity.
Many providers of one-year, fixed-rate bonds raised their rates last week and now pay 4.65 to 4.8 percent.
Some of these include SmartSave, Tandem Bank, Secure Trust and Close Brothers. Ziraat fund offers 4.8 per cent fixed rate for one year through Rice deposit fund.
Virgin Money (now part of Nationwide) increased its one-year score from 4.11 per cent to 4.52 per cent. And newcomer Vida Savings has launched its first account – a one-year bond at 4.77 per cent, available through savings platform Hargreaves Lansdown.
Hargreaves has increased the savings by adding a cashback of up to £150 if you move £75,000 into its Active Savings platform before 5 February. of increasing the Vida rate to 4.97 percent.
So if you find a fixed-rate bond that you like, grab it. After all, when suppliers brought their fixed income into deposits they quickly cut rates to reduce the flow.
One reason interest rates remain high is that more providers are looking for money to grow their businesses
Savers with a one-year contract can get a rate of more than double the current 2.3 percent inflation rate.
Consider a fixed-rate bond if you’ve used up your total savings of £20,000 per year and have plenty of cash in an easy-to-access account in an emergency. Its main advantage over easy access accounts is that the rate does not change for the entire period. But you should be very happy to tie up your money.
One reason interest rates remain high is that more providers are looking for money to grow their businesses.
BACB (British Arab Commercial Bank), Ziraat Bank, Stream Bank, Conister Bank, JN Bank, Vida Savings and credit union Plane Saver are among them.
The new banks charge the best rates to encourage investors to use them. But choose one that is covered by the Financial Services Rewards Program and save your money.
The scheme gives you £85,000 of cover – £170,000 on joint accounts – if the provider goes into trouble.
The second reason rates are so competitive right now is that investors have been hit hard with the easy accounts that providers want to attract.
Trustees added £14 billion to easy-to-access loans last month, according to Bank of England figures. This is the biggest jump on record, apart from a few months into the pandemic when many households have no choice but to save as they cannot spend money on treats like vacations.
But the number of accounts paying 4.7 percent or more has halved in the past month to just four — and rates continue to fall.
If all of your cash is in checking accounts and you can lock the others away for a long time, now is a good time.
