Top savings accounts now offer interest rates more than double inflation | Personal Finance | Finance

Top savings accounts are now offering interest rates more than double the UK’s current rate of inflation, an expert has said.

Research by Savings Accounts shows out of 1,735 products in the market, 1,642 savings accounts now offer an interest rate above April’s 2.3 percent inflation rate.

Subsequently, Lucinda O’Brien, savings expert at argues that while the “market is booming”, there is no reason for savers to leave their money in an account that has an interest rate below inflation.

Easy access accounts

According to Ms O’Brien, easy access savings accounts are perfect for savers who want to earn interest on their money, but may also need the flexibility of accessing it when needed.

She said: “Oxbury currently has the top rate for this type of account at 5.02 percent, but you’ll need an opening balance of £20,000 and if the balance falls below this amount the interest is not paid.”

Additionally, Ms O’Brien noted: “Kent Reliance has a more accessible easy access account as its offering can be opened with £1,000 and this has an interest rate of 4.96 percent if there are only two withdrawals in 12 months.

“It’s also important to check the terms and conditions of easy access accounts and assess which one works best for you. Plus, easy access accounts normally have a variable interest rate which means it can go up and down.”

Fixed-rate accounts

Alternatively, fixed-rate accounts offer savers the chance to lock away their money for a set period of time, after which they’ll be rewarded with a fixed interest rate.

Ms O’Brien said: “National Bank of Egypt UK via Raisin currently has a one-year fixed-rate account at 5.22 percent and this has a minimum opening balance of £10,000. This account is exclusive to Raisin and guarantees a competitive interest rate for 12 months.

For savers keen to lock away their money for longer, Ms O’Brien said: “Raisin continues to be a good place to explore as it has a five-year fixed-rate account from Işbank at 4.75 percent. This is still more than double the inflation rate and it can be opened with £1,000.”

Notice savings accounts

Ms O’Brien said notice savings accounts offer a “happy medium” to savers as they have high interest rates and no fixed-term.

However, she noted: “The only condition is that savers provide a set amount of notice before withdrawing their money. For example, Investec is currently offering a 90-day notice savings account at 5.25 percent and this can be opened with a minimum deposit of £5,000.

“This is a great interest rate as it not only beats inflation but matches the Bank of England’s base rate.”

Cash ISAs

Ms O’Brien urged: “Don’t forget about Cash ISAs as this offers tax-free savings up to £20,000. Interest rates are normally slightly lower but the trade-off is that you won’t pay any tax on the cash you earn via the interest rate.

Plum’s cash ISA is competitive at 5.17 percent and this includes a bonus rate of 0.88 percent for the first 12 months.

However, Ms O’Brien said: “There are some terms to adhere to, for example, the balance must be above £100 and no more than three withdrawals in 12 months.”

In terms of fixed-rate cash ISAs, Ms O’Brien said: “United Trust Bank has a one-year bond at 4.78 percent and this can be opened with a minimum deposit of £5,000. “

See how these interest rates compare to the best deals of the week.

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