Rachel Springall, Finance Expert at Moneyfacts.co.uk, 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. 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.

“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. 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 and this arena could worsen further if consumers prefer shorter-term offers.

“Consumers’ attitudes to saving in 2023 will depend on their immediate needs and desired goals, but for many, flexibility with their money could be essential to help them keep on top of the cost of living. Those savers comparing easy access accounts or ISA equivalents would be wise to check any terms meet their needs, as some accounts will restrict withdrawals and lead to a rate drop or closure of the account when any limit is breached. Comparing any existing account against the latest deals out there is essential and signing up to newsletters and rate alerts will help them save some time and keep them in the know.”

*Data note: Please note that these savings product numbers only include deals that are available to UK residents (easy access, notice, fixed rate bonds, variable or fixed ISAs) and exclude regular savers and children’s savers (this figure does not count each interest payment option for each account), based on a £10,000 deposit. Higher rates may be available for other levels of deposit.