Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:
“Savers will find a bit of volatility within the top rate tables since last month, so it’s essential to review their nest egg to ensure it’s still paying a competitive rate. Inflation eats away at savers’ hard-earned cash, so it’s worth keeping this in mind when comparing different savings accounts to ensure they are earning a decent real return.
“One area of the savings market to see another drop in the top rate is one-year fixed bonds. The best deals today are still paying over 5%, but at the start of 2024, the top rate paid 5.50%. Providers have been reducing fixed rates over recent months as expectations grew for future interest rates to come down, thankfully, such volatility has calmed. Those savers who are about to have their existing one-year bond mature can beat the market-leader from April 2023, and those savers coming off a two-year fixed bond will find rates more than double the top rates available in April 2022.
“In the run-up to the new 2024/25 tax-year it proved to be a positive ISA season. Easy access Cash ISAs thrived, which is great news for those who want to utilise their allowance but require some flexibility with their nest egg. The new ISA rules may also encourage savers to use ISAs more this year. Those looking to invest for longer will still find the top fixed ISAs are paying less than their fixed rate bond counterparts, but fixed bond rates are higher than this time a year ago, so those who invest could end up breaching their Personal Savings Allowance (PSA). Indeed, higher rate tax-payers have a £500 limit on any interest earned, and basic rate tax-payers get a £1,000 limit. Those who invest a £20,000 lump sum in an account that pays 5% for one year will earn £1,000.
“Switching accounts is essential for any saver who finds their loyalty is not being rewarded. Considering the more unfamiliar brands is wise but it’s important consumers take time to review any restrictive criteria an account can impose to ensure it works for them.”
*Data note: Please note that these savings product numbers include deals that are available to UK residents (easy access accounts, notice accounts, fixed rate bonds, variable Cash ISAs, and fixed Cash ISAs) and exclude regular savers, children’s savers, variable rate fixed term bonds or ISA, JISAs and LISAs, based on a £10,000 deposit, gross rates. Higher rates may be available for other levels of deposit.
Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:
“Savers will find a bit of volatility within the top rate tables since last month, so it’s essential to review their nest egg to ensure it’s still paying a competitive rate. Inflation eats away at savers’ hard-earned cash, so it’s worth keeping this in mind when comparing different savings accounts to ensure they are earning a decent real return.
“One area of the savings market to see another drop in the top rate is one-year fixed bonds. The best deals today are still paying over 5%, but at the start of 2024, the top rate paid 5.50%. Providers have been reducing fixed rates over recent months as expectations grew for future interest rates to come down, thankfully, such volatility has calmed. Those savers who are about to have their existing one-year bond mature can beat the market-leader from April 2023, and those savers coming off a two-year fixed bond will find rates more than double the top rates available in April 2022.
“In the run-up to the new 2024/25 tax-year it proved to be a positive ISA season. Easy access Cash ISAs thrived, which is great news for those who want to utilise their allowance but require some flexibility with their nest egg. The new ISA rules may also encourage savers to use ISAs more this year. Those looking to invest for longer will still find the top fixed ISAs are paying less than their fixed rate bond counterparts, but fixed bond rates are higher than this time a year ago, so those who invest could end up breaching their Personal Savings Allowance (PSA). Indeed, higher rate tax-payers have a £500 limit on any interest earned, and basic rate tax-payers get a £1,000 limit. Those who invest a £20,000 lump sum in an account that pays 5% for one year will earn £1,000.
“Switching accounts is essential for any saver who finds their loyalty is not being rewarded. Considering the more unfamiliar brands is wise but it’s important consumers take time to review any restrictive criteria an account can impose to ensure it works for them.”
*Data note: Please note that these savings product numbers include deals that are available to UK residents (easy access accounts, notice accounts, fixed rate bonds, variable Cash ISAs, and fixed Cash ISAs) and exclude regular savers, children’s savers, variable rate fixed term bonds or ISA, JISAs and LISAs, based on a £10,000 deposit, gross rates. Higher rates may be available for other levels of deposit.
