This 1.5% easy-access account earns 150 times more interest than Barclays – ‘Check it out’ | Personal finance | Finance
Seeking a decent savings rate is increasingly important, with the Bank of England set to raise base rates to 1% on Thursday. The tide could finally turn in favor of savers, with cash deposit returns improving as a result.
If the BoE’s Monetary Policy Committee raises rates from 0.75% to 1% as expected, it will be the FOURTH increase since December.
That would mean savings rates jumped from their all-time low of 0.1% in a matter of months, but the big banks haven’t followed suit.
Lloyds Easy Saver, NatWest Instant Saver and HSBC Flexible Saver all raised interest rates by a measly 0.01%, but only to 0.1%. The Barclays Everyday Saver account continues to pay only 0.01%.
However, there are much better deals from lesser-known names.
Today’s top six easy access accounts now pay 1.20% on average, down from 0.44% a year ago, based on a £10,000 deposit. The best current easy access offer, the Chase Saver Accountpays 1.49 percent.
Incredibly, that’s 149 times the rate paid by Barclays Everyday Saver.
Chase pays that 1.49% on savings of up to £250,000. To qualify, you must first open a checking account with Chase, but unlike some checking account offers, you don’t have to close your old account.
The Chase account also offers 1% cash back on your daily debit card spend for one year.
Challenger banks dominate the best buy tables, as Aldermore pays 1.25% on easy access, Zopa offers 1.19% and Tandem 1.10%.
Instant Cash Isa rates have also increased, with Cynergy Bank paying 1.05%, the market leader, while Marcus of Goldman Sachs and Saga both pay 1%.
Moneyfacts finance expert Rachel Springall said base rate hikes have prompted action by banks and building societies, but challenger banks dominate the top rate charts.
READ MORE: “Breakthrough Rate”: Easy Access Account offers 1.5% interest on savings
Shopping around is vital as more than eight in 10 easy access accounts still pay less than 0.75%, Springall added.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, warned against leaving too much money on easy access now. “The vast majority of the easy-to-access money is at the high street giants, earning next to nothing.”
She said everyone should have an emergency fund covering three to six months of essential expenses, but leaving more on easy access is a costly mistake.
Fixed rate savings accounts are improving, with Shawbrook paying 1.96% for one year, United Trust Bank paying 2.50% per year for three years and PCF offering 2.75% for five years.
With interest rates set to rise further as the Bank of England seeks to fight inflation, better deals may soon follow.
“For cash that you don’t think you’ll need for five years or more, consider whether it’s appropriate to invest some of it,” Coles said.
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The stock market offers a much better return over the long term, but many will be wary today.
Rising interest rates, tapering central bank stimulus, war in Ukraine and China’s Covid lockdowns are fueling stock price volatility.
George Lagarias, chief economist at Mazars, said “stock and bond markets are in disarray”.
He added: “This marks by far the worst start to a year this century.”
A growing number of Britons are struggling to save money, with more than four in 10 saying they won’t be able to save anything at all in the next 12 months, official figures show.