HomeBusinessBest buy savings: Top one-year fix and easy-access launched

Best buy savings: Top one-year fix and easy-access launched

Rate starved savers are seeing a base rate bounce today following the Bank of England’s decision yesterday to up the bank rate from 0.25 per cent to 0.5 per cent. 

Aldermore Bank reinstated its best buy easy-access deal paying 0.75 per cent and Recognise Bank has launched the highest paying one-year fixed rate since March 2020

The Recognise Bank rate pays 1.6 per cent, overtaking what was the market leading product by as much as 0.2 percentage points.

The challenger bank’s one year deal has come in strong and pays only 0.02 percentage pints less than the best two-year fixed rate deal, offered by Charter Savings Bank. 

BASE RATE BOUNCE: Savers will be hoping that this could spark somewhat of a savings revival.

James Blower, head of digital at Moneyfacts said: ‘This new one year fixed rate paying 1.6 per cent from Recognise Bank is the highest since March 2020. 

‘It is great news for savers to see a new best buy so quickly after the base rate increase yesterday.’ 

No accounts currently come close to matching inflation – and it is predicted by April, the measure will surpass 7 per cent.  

Having only entered the personal savings market in September, Recognise Bank’s decision should help attract savers back to the fixed rate savings market.

Last year, many savers appear to have withdrawn cash from fixed deals, with savings held in these products down £9billion compared to a year earlier. 

Accounts can be opened with £1,000 but only online, and savers cash is protected by the Financial Services Compensation Scheme to the tune of £85,000 per individual, which is also the maximum that can be deposited in the account.

Someone stashing £10,000 into the Recognise’s one year account could expect to earn £160 in interest over the course of a year, whilst someone saving the maximum £85,000 in the account, will secure £1,370 in interest. 

Type of account (min investment)                   0% tax 20% tax 40% tax
ONE YEAR                         
Recognise Bank (£1,000+)                    1.60  1.28  0.96 
Zopa Bank (£1,000+)                    1.36 1.09 0.82
18 MONTHS                        
Charter Savings Bank (£5,000+)                    1.51 1.21 0.91
Gatehouse Bank (£1,000+) (3)                    1.51 1.21 0.91
TWO YEARS                  
Charter Savings Bank (£1,000+)                    1.62  1.30  0.97
Atom Bank (£50+)                    1.60  1.28 0.96 
THREE YEARS                  
QIB (UK) (£1,000+) (3)                    1.85 1.48 1.11
United Trust Bank (£5,000+)                    1.80 1.44 1.08

The account also gives savers a generous 30 days in which to fund it, so once opened, savers will have time to add money to it.

However, savers will need to act fast to take advantage, as the product is likely to survive for only a matter of days before it is pulled.

‘Recognise only launched last year and has a small balance sheet, which means they are unlikely to be able to take too much demand on this product,’ said Blower.

‘Given this, I do not expect this rate to be available for more than a few days, so I would recommend that savers interested in it move very quickly to secure it.’

Recognise Bank's one year deal is a whole 0.2 per cent higher than the next best product on the market.

Recognise Bank’s one year deal is a whole 0.2 per cent higher than the next best product on the market.

For those who miss out or are perhaps uneasy at the prospect of locking their cash away for a year, Recognise is also boosting all of its variable rate accounts, in line with the bank’s base rate rise.

From Wednesday next week it is increasing the rate on its 95 day notice account from 0.85 per cent to 1.1 per cent – making it a new best buy.

Notice accounts are essentially a halfway house for those fed-up of low paying easy-access rates but wary of locking their money away for a fixed amount of time.

Damian Trussler, head of savings at Recognise Bank, said: ‘After several years of paying extremely low interest rates on their accounts, it doesn’t seem fair that providers aren’t passing on the Base Rate rise to hard pressed savers.

‘We are likely to see more Base Rate hikes from the Bank of England this year, and with so many consumers facing a hit on their wallets from spiralling prices, savers need to vote with their feet if they are not getting a fair rate from their bank or building society.’

What’s happening with easy-access?

The easy-access market is also registering somewhat of a base rate bounce – at least at the top of the market.

Aldermore Bank has relaunched its double access account paying 0.75 per cent – 0.04 per cent more than the current market leader, Investec.

Savers will need £1,000 to open the account and will be limited to just two withdrawals each year, which means it is more restrictive than a typical easy-access deal.

For savers who don’t need to access their cash frequently and are perhaps using the account as an emergency pot or towards a longer term goal, then the limitation of two withdrawals will likely be worth it.

The account allows for savers to deposit up to £1million. 

Money is protected under the Financial Services Compensation Scheme to the tune of £85,000 or £170,000 in the case of joint accounts.

Someone stashing £10,000 into the Aldermore account could expect to earn £75 in interest over the course of a year – if Aldermore’s rate remains the same.

Blower believes that Aldermore’s move could spark somewhat of a price war at the top of the market, which could drive rates higher.

He said: ‘It’s great to see higher rates on easy access accounts, following the base rate increase, and I expect to see more providers follow suit and an increase in competition for easy access money.

‘Marcus is the largest provider at the top of the best buys and it will be interesting to see if it responds and increases the 0.6 per cent it currently offers.

‘If it does, it could spark a price war and drive prices higher. Regardless, it is likely that we will see easy access rates nudge up as providers fight for position at the top of the tables.’

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