How you can now get 5% interest on your savings with Allica Bank’s new one-year fixed-rate account
A newly launched fixed-rate savings account offering savers 5 per cent return is now the best deal on the market.
Savers can boost their returns by joining Allica Bank’s new 12-month fixed-term account, offering the highest rate on any easy access or fixed deal.
The fintech challenger bank has upped its rates in response to the Bank of England increasing the base rate to 4.5 per cent yesterday.
While many other banks also increased their rates, Allica’s is currently the highest.
However, there is a catch. Customers must deposit a minimum of £10,000 into the account, something which may not be an option for many. The limit is £250,000 and it can only be opened online. No withdrawals can be made throughout the term.
It is likely this deal will disappear quickly, due to high demand.
Savings accounts have been the subject of scrutiny lately after MPs quizzed bank bosses on why they were not upping their rates in line with the base rate, even though they were increasing mortgage repayments.
The best easy access current account rate is 3.71 per cent with online bank Chip, whilst the best deal, prior to Allica Bank’s offering, was with Isbank, which offered 4.95 per cent on its three, four and five-year fixed deals.
However, some banks are still offering returns of as little as 0.1 per cent. As a result, the Treasury Committee wrote to even more banks this week, demanding to know why their savings rates were woefully below what the interest rate was.
While some have upped their offerings as the base rate continues to rise, reaching its twelfth consecutive increase, all are still well below the current rate of inflation, which sits at 10.1 per cent.
This means savers are making a real-terms loss as their spending power is significantly reduced.
At present, the best bet for savers is fixed accounts as they are offering up to 5 per cent returns.
This does require consumers to lock their funds away, however, which many will not be happy or able to do given the cost of living crisis.
Anna Bowes of Savings Champion said: “It’s great to see more competition in the short term bond markets, so those with a minimum of £10,000 would be wise to jump to take advantage of opening this bond, as it’s unlikely to be available for long.
“But remember that if you tie your cash into either of these bonds, there is no access to the money until maturity, so make sure you won’t need the cash before depositing your cash.”
