Marcus Bank has upped the rate on its popular easy-access savings account nudging it higher in the independent This is Money best buy tables.
The Goldman Sachs backed bank has increased both its online savings account and cash Isa deal from 0.5 per cent to 0.6 per cent.
However, it continues to offer an additional fixed-rate bonus of 0.1 per cent on both accounts which means savers will secure 0.7 per cent in total for one year.
Existing customers will get the uplift to 0.7 per cent added automatically, but need to log-in to their account to add the extra 0.1 per cent.
The Goldman Sachs backed bank has increased both its easy-access account and cash Isa
For those that have already boosted their account previously, the bonus rate will expire sooner depending on when they added it to their account.
Savers can open an account with Marcus with as little as £1 and can deposit up to £250,000.
Cash is protected up to £85,000 per individual by the Financial Services Compensation Scheme and in the case of joint savings accounts that doubles to £170,000.
Someone saving £10,000 into the Marcus account can expect to see a return of £70 over the course of the year.
The move by Marcus Bank sees it join an increasing number of providers upping rates, following the Bank of England base rate rise last month.
|Source: Savings Champion/This is Money *Savers can opt into 0.1% rate boost|
However, some will see its 0.1 percentage point rise as a little disappointing, given the plethora of easy-access deals currently paying 0.7 per cent or higher.
Its decision is likely in part to avoid it hitting £25billion in deposits and breaching British banking rules.
If it were to do this, it would be forced to ring-fence its UK operations and leave it unable to use the money to finance its London-based investment banking unit. It has previously come close to surpassing this.
James Blower, founder of The Savings Guru said: ‘I’m not surprised that Marcus has been relatively cautious with their increase only moving up to 0.7 per cent on easy-access.
‘They haven’t publicised their deposit levels recently but have to keep under £25billion to keep within ringfencing limits.
‘I expect they’ve seen reasonable outflows in the past couple of months, as they’ve dropped down the tables, and I’d suggest their balances have dropped below £20billion to somewhere around £18-19billion.
‘This move will be designed to lift balances back up but not to bring in huge levels of inflows.’
However, with inflation reaching 5.5 per cent as of January and expected to peak at around 8.3 per cent this year, the Bank of England is expected to further up the base rate over the coming months.
This will likely mean savings rates will continue to rise at the top of the market, meaning Marcus may increase its rates again soon.
‘Interest rates on savings are increasing and I expect further rises to come,’ said Blower.
‘With rates ticking upwards, I believe that Marcus will have to increase again in April or May to keep pace.’
How does it compare with other deals?
Although the Marcus rate rise will be good news for the many savers who already have an account opened, it may not be enough to entice new savers in.
There are better deals currently on offer for those savers currently on the hunt for easy access accounts.
Cynergy Bank is currently offering a bonus rate for the first year paying 0.8 per cent, whilst Tandem Bank and Atom Bank are paying 0.77 per cent and 0.75 per cent respectively. All three challenger banks are backed by FSCS protection.
For those looking to stash away large amounts it would also be worth considering Yorkshire Building Society’s Internet Saver Plus issue.
Although those with balances between £1 and £10,000 will receive a 0.6 per cent rate, savers with a balance between £10,000 and £50,000 will benefit from a rate of 0.77 per cent on their savings.
Those with in excess of £50,000 will earn a best buy 0.82 per cent. Meanwhile, those who have a current account with Virgin Money or open one can get a 1 per cent rate on balances up to £25,000.
Blower adds: ‘Savers with large balances should definitely look at Yorkshire’s deal whilst Tandem’s 0.77 per cent rate will appeal for those with smaller balances, given its £1 minimum balance.
‘Savers prepared to lock away cash for a little longer should also consider Zopa – although their 0.72 per cent easy access rate is not the highest, it has 7 day, 31 day and 95 Day notice account pots which pay excellent rates of 0.75, 0.85 and 1.05 per cent respectively.’