Top savings account pays 10 times the average

The top easy-access savings account now pays almost 10 times more than the average rate, although savers are warned the best deals will not last long.

The five highest-paying savings accounts now offer an average rate of 1.2pc. In contrast, the average easyaccess rate is just 0.14pc, according to the latest Bank of England data.

The top rates are also coming from smaller providers, rather than the big banks.

This week RCI Bank, the French provider, increased the rate of its Freedom Savings account from 1.2pc to 1.3pc, pushing it to the top of the bestbuy tables. The account can be opened online with £100.

Kent Reliance also launched a new easy-access account this week, paying 1.27pc to those who have £1,000 or more to save. Customers with balances between £1 and £99 will earn just 0.1pc.

A balance of £15,000 will yield £190.50 in a year with Kent Reliance or £195 with RCI Bank.

Savers should also be aware of how their money will be protected.

For example, RCI Bank is not covered by the Financial Services Compensation Scheme. This protects savings up to £85,000 held by authorised financial services in the UK.

Instead RCI Bank subscribes to the equivalent scheme in France, the Fonds de Garantie des Dépôts et de Résolution, which will compensate savers up to €100,000 (equivalent to £89,264) if the bank goes bust.

At the current exchange rate RCI customers have more of their cash protected than with authorised banks in the UK. However, this could all change with currency fluctuations. If the euro weakens against the pound, savers will find themselves worse off.

A number of easy-access deals have sprung up recently, although experts warn they won’t stay around for long.

Rachel Springall of Moneyfacts, the data firm, said: “We know that these hikes don’t tend to last on the market for too long due to demand.”

She added: “However, fixed-rate bonds have been rising with gradual increases since the start of the year.”

Those looking for higher rates could earn more from current accounts and regular savers, which pay 5pc, although these rates will be paid on smaller sums.

For example, Nationwide’s FlexDirect current account pays 5pc on balances up to £2,500. You must pay in £1,000 a month and the rate drops to 1pc after 12 months.

Tesco Bank pays 3pc on £3,000. Customers must set up three direct debits and pay in £750 a month.

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