Savings account: launch of a new rate of 1.2% because savers “are not looking for the best offer” | Personal Finances | Finance
Savings rates remain low for now, but banks and other financial companies regularly launch new offers to appeal to customers. Today, Moneyfacts.co.uk released its latest “Pick of the Week” which highlighted three accounts that received a boost.
The first comes from DF Capital, which has launched a new account and interest rate for savers.
Eleanor Williams, Financial Expert at Moneyfacts.co.uk, explained: “DF Capital this week launched a new 18-month fixed rate deposit that pays 1.20% at maturity.
“This account ranks first compared to other bonds with similar terms currently offered.
“As is common in the fixed bond industry, early access is not allowed, however, further additions can be made within 14 days of opening the account which could be a plus for some investors.
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“Available for a minimum investment of £ 1000, this could be a tempting proposition for those who are happy to lock in their savings for the 18 month term and savers may be happy to note that the account guarantees an excellent Moneyfacts product rating. . “
Tandem Bank also raised rates on one of its existing transactions.
Ms Williams continued, “One of the accounts that will benefit from a rate hike from Tandem Bank this week is the 1 Year Fixed Saver. Now paying 1.11% on the anniversary, the account has improved its position in the top ten compared to other fixed bonds currently available with a similar term.
“Savers who are happy to secure their funds for the duration might be tempted to return but should make sure they are happy to sign up from the start as early access is not allowed on this account. however, further additions are possible within 14 days of opening the account which could be positive for some. Overall the account has an excellent Moneyfacts product rating. “
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Ms Williams concluded on the third and final savings account highlighted by Moneyfacts.co.uk: “Savers who have not yet used their ISA allocation may want to note that among the products that will be updated this week is the Shawbrook Bank 2 year ISA. rate increase of 0.03%, this ISA now pays 0.91% on anniversary, seeing this account improve its position in our highest rate tables.
“Those looking to supplement their income may be interested to note that this account also offers a monthly interest option, which could be a benefit for some.
In addition, the appeal of this fixed rate ISA is further enhanced by the fact that there is some flexibility to access funds early, as this is permitted subject to an interest penalty. , this account receives an excellent Moneyfacts product rating. “
Long-term savings account providers may be keen to make improvements such as these given recent data from the CACI.
Paragon Bank, looking at data from CACI, showed that easy-to-access non-ISA savings have grown their market share steadily throughout the past year and are now a record 60% of the total market. savings.
Savings balances recorded in the CACI database, which records data from more than 30 providers, including the largest banks, showed that the easy-to-access non-ISA market has grown by £ 80 billion since the start of the pandemic in March 2020, an increase of 14%.
Another product that has performed particularly well over the past 18 months has been the non-ISA ordinary savers category, which has grown 23% and now accounts for 1.6% of the market (up from 1.3% at the start of the pandemic. ).
The non-ISA fixed rate market, by contrast, has fallen steadily throughout the pandemic, dropping from 10.3% in March 2020 to 7.69% in May.
Derek Sprawling, Director of Savings at Paragon Bank, commented on the results: “While Bank of England data shows the household savings rate is slowing as pandemic restrictions are lifted, balances easy access continued to grow at a rapid rate throughout the pandemic. .
“We’re seeing a gradual increase in rates and better buy deals on Easy Access, but 72% of Easy Access balances are still receiving a rate of 0.1% or less, showing that savers are not looking. the best offer.
“Much of the easily accessible balances continue to sit in high street banks, despite those that traditionally offer much lower than average rates.
“Challengers and mid-tier vendors, on the other hand, tend to top the best buy rankings. They offer savers the opportunity to more than double their returns, as providers who target proactive savers compete with each other.
“We’re also seeing a rise in rates in the fixed rate market, so it will be interesting to see the impact that has on this category’s market share as we move forward into the fall.”