Happier returns as savers enjoy rate pick-me-up
SAVERS are slowly beginning to see a better return on their money as best buy savings rates pick up, though they remain far below rocketing inflation.
While savers can now get 1.5 per cent on instant access, the inflation rate hit a thumping 7 per cent in March.
It is possible to get 3.25 per cent from a best buy regular savings account, but like many accounts, the most attractive rates come with a catch.
Some of today’s top deals are restricted to the bank’s existing customers, or are only paid on limited sums of money.
US banking giant JP Morgan has thrown down a challenge to UK banks by paying 1.5 per cent on its easy access Chase account.
That is double the Bank of England base rate of 0.75 per cent and the highest easy access rate in almost three years, said Anna Bowes, founder of savings rate tracking service Savings Champion.
Chase pays that rate on deposits up to a maximum of £250,000, with no fees, charges or loss of interest for accessing your cash. Bowes said savers must take out a Chase current account to qualify: “However, you do not need to switch your main current account or set up any direct debits, so can retain your own bank account too.”
Bowes said the top easy access accounts all now pay 1 per cent or more. Cynergy Bank pays 1.2 per cent, Zopa 1.15 per cent and Tandem pays 1.1 per cent.
These are all lesser-known “challenger” banks but the first £85,000 of your cash is still protected under the Financial Services Compensation Scheme, offering security.
The big high street banks have grudgingly increased their easy access rates, but only from 0.01 per cent to 0.1 per cent. “That gives you just £1 in interest a year, for every £1,000 deposited,” Bowes said.
A huge £265billion is languishing in current accounts paying no interest at all and Bowes called for more competition.
Last week, Santander launched a new 123 Regular e-Saver paying a fixed rate of 2.5 per cent for 12 months.The webbased account is restricted to existing Santander 123, Private and Select current account customers, who can pay in up to £200 per month, with a maximum annual balance of £2,400.
This will give them just £32.26 in interest over the year, up from the previous £6.50.
Nationwide Building Society’s Flex Regular Saver also pays 2.50 per cent on a maximum £200 per month deposit, with interest totalling £32.50 over 12 months. The NatWest Digital Regular Saver pays 3.25 per cent on balances up to £1,000, with a maximum investment of £150 a month. Those who saved that sum for one year would generate interest of £25.58.
Rachel Springall, finance expert at Moneyfacts, said: “Most regular savings accounts are either exclusive to new or existing current account customers, so check criteria.”
Rising rates may be good but even the best accounts will fail to protect the value of your money as inflation rockets.