Where to save as best rates inch up AGAIN
NEW banks are behind a flurry of rises on both easy-access accounts and fixed-rate bonds.
The renewed competition gives savers more reason to shop around for a deal. Those sticking to easy-access and short-term deals will keep their options open if rates continue to rise.
With taxable easy- access accounts, Shawbrook Bank’s Easy Access Issue 10 pays 1.2 pc. Paragon’s new Limited Edition Easy Access 3 pays 1.15 pc.
Last week, French-owned RCI Bank raised its rate from 1.1 pc to 1.2 pc for new and existing savers. Ulster Bank still offers its eSavings account at 1.25 pc.
None of these come with a bonus, so you won’t have to search for a better- paying account after 12 months.
Some providers pay more than 1 pc, but the rate drops after the first year. The Post Office’s Online Saver issue 25 rate is 1.11 pc for new savers, but drops to 0.25 pc after a year.
The new PCF Bank launched fixed-rate deals last week, at 1.81 pc for a year, 1.86 pc for 18 months and 1.95 pc for two years. Within days, Shawbrook upped its one-year rate to a top 1.9 pc and its two-year deal to 2.05 pc.
Paragon and United Trust banks also pay 2.05 pc for two years. These rates are only for those willing to open accounts online. If you do stick to the High Street, head for a local building society, rather than big banks. Anna Bowes, director at savings
champion.co.uk, says: ‘Building societies are showing greater support for customers, with higher rates and a greater commitment to treating customers fairly.
‘Big High Street names are the worst culprits for poor rates. A significant portion of money is still languishing in these uncompetitive accounts. Now is the time to switch away from them.’
The top easyaccess building society rates include Yorkshire BS’s Single Access Saver, at 1.1 pc, but you can only withdraw on one day a year. Coventry BS pays 0.85 pc and Newcastle 0.8 pc, far more than the 0.01 pc paid by some big banks.
Yesterday, the Family BS launched a one-year bond at 1.56 pc for £1,000 plus, or 1.76 pc on £10,000 plus, available from its Epsom branch, online or by post. Its two-year rates are 1.66 pc and 1.86 pc. Other top deals include Yorkshire BS’s 1.2 pc for one year or 1.3 pc for two years. Patrick Connolly, adviser at Chase de Vere, says: ‘It makes sense to use new banks when they offer better rates, as long as they are covered by the compensation scheme. ‘Don’t pick a fixed-rate deal longer than two years.’ You are covered up to £85,000 by the Financial Services Compensation Scheme if a bank runs into trouble with all those highlighted, except RCI’s Freedom Account. Here, €100,000 (around £89,000) is covered under the equivalent French scheme. Experts predict no change in base rate when the Bank of England Monetary Policy Committee meets tomorrow. When it eventually does move, it will be a slow process. Samuel Tombs, an economist at Pantheon Macroeconomics, says: ‘Base rate is going nowhere for 18 months, due to uncertainty over Brexit.’ It forecasts a 0.25 pc rise in spring 2019, reaching 1 pc by the end of 2019. Capital Economics forecasts a rise next spring before reaching 0.75 pc at the end of 2018.