Savings rates start to rise as tide may be turning for savers

Tide may be turning for savers as some providers start to nudge up rates

  • ‘Best-buy’ two-year fixed-rate bond from Zopa pays 1% interest
  • The best rate on a one-year bond is now 0.86% 
  • That’s higher than 0.7% at the start of the month and 0.59% in April

Good news has been in short supply for savers ever since the Bank of England slashed interest rates in the early days of the pandemic. But savings experts believe the tide is starting to turn a little as some providers nudge up rates.

Analysis by the rate scrutineer Savings Champion shows that a number of deposit-takers have tickled up rates this month – or introduced new fixed-rate bonds with higher rates than before.

‘It’s been a good month in terms of interest rate changes,’ says Anna Bowes, co-founder of Savings Champion. 

A number of providers have tickled up rates this month or introduced new fixed-rate bonds

‘There have been more increases than decreases, which means many savers can now secure a better deal if they are prepared to shop around and look beyond the accounts offered by traditional banks and building societies.’ 

Bowes says the 1 per cent interest now available on a ‘best-buy’ two-year fixed-rate bond from financial services company Zopa is the highest rate offered across all two-year bonds since last year. 

Similarly, the best rate on a one-year bond is now 0.86 per cent compared with 0.7 per cent at the start of the month and 0.59 per cent in April.

‘I’m not sure how much higher savings rates will go in the short term,’ says Bowes. 

‘But for those savers with money languishing in a bank savings account paying just 0.01 per cent, it makes sense for them to hunt down a better rate sooner rather than later.’

Charter Savings Bank and Aldermore are among those to increase rates in recent days. 

Aldermore pushed up interest rates for new customers on its one, two, three and five-year bonds to between 0.85 per cent (on the one-year bond) and 1.45 per cent (on the five-year bond). 

Best savings rates are typically available online although Charter’s new easy access account (issue 20) also permits postal applications.

Ewan Edwards, director of savings at Aldermore, says: ‘While it’s still a challenging environment, easing of lockdown restrictions and savings rate increases will provide a boost to many people’s short and long-term money goals.’ 

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