Many of the best savings deals are being pulled from the market as they now beat inflation, with savers warned they should act quickly if they want to benefit from the highest rates.
Inflation fell to 3.2 per cent in March – the lowest level it has been at in two years – which in turn means interest rates are also more likely to come down.
As a result, those who deposit money with providers offering the best rates have seen real-term returns on their cash. But this won’t be for long, experts warn.
Anna Bowes of Savings Champion, said: “Another fall in inflation means there are many savings accounts that are matching and even beating inflation.
“Therefore, it may be prudent to consider fixing into some longer-term bonds now as well as earning the best rates over the short term.”
While the best saving deals are still paying over 5 per cent, some providers have reduced fixed rates over recent months, due to expectations growing for future interest rates to come down.
Currently, the base rate is at 5.25 per cent but is expected to come down in the summer months. Savings rates tend to follow the base rate and so are also expected to fall.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, told i: “The returns available on fixed-rate deals have fallen over recent months, but savers can still grab a decent deal. The fluctuation of rates across the top-rate tables should encourage savers to review and switch their account if they are not being rewarded for their loyalty.
“Challenger banks can have lower administrative costs and are able to offer higher rates than other brands, but they can also change offers quickly, so speed is crucial to grab a top rate.”
Despite this, the offers on the table are still better than at this point last year, when banks were coming under pressure to pass on Bank of England interest rate rises.
The Treasury Committee, a cross-party group of MPs, wrote to the biggest high-street banks – Barclays, HSBC, Lloyds Banking Group and NatWest Group – to ask about low interest on their accounts.
One year ago, the best easy-access account from Chip paid 3.35 per cent- nearly 2 percentage points lower than the best account available today.
The best savings rates
Best easy access rate
cahoot – 5.20%
Ulster Bank – 5.20%
Monument Bank – 5.01%
Paragon Bank – 5.00%
Kent Reliance – 4.96%
Best one-year fixed rate
SmartSave – 5.17%
Allica Bank – 5.17%
Close Brothers Savings – 5.16%
Atom Bank – 5.15%
QIB (UK) – 5.15%
Best two-year fixed rate
DF Capital – 5.07%
Hampshire Trust Bank – 5.06%
RCI Bank UK – 5.05%
Close Brothers Savings – 5.05%
SmartSave – 4.96%
