As average savings rates decline across the board despite greater competition.
Savers have a record number of brands to consider after two providers rejoined the market in May, the latest Moneyfacts UK Savings Trends Treasury Report revealed. This saw the total number of savings providers rise to 153 as of the beginning of June.
What’s more, the number of products (including ISAs) for savers to choose from also increased – reaching a new record high of 2,235 as of the start of this month.
However, despite the more competitive environment, average savings rates suffered month-on-month – in part due to the Bank of England’s Monetary Policy Committee cutting the base rate to 4.25% at the start of May.
But, after it was revealed last month inflation rocketed to 3.5% in April, can savers really afford not to explore the vast number of options available?
Should you consider a less familiar name?
The “steady rise of challenger banks” over recent years has helped broaden choice for savers, Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, explained. These are smaller retail banks that compete with the UK’s biggest high street brands for custom.
It’s often the case challenger banks offer some of the best rates on the savings market to entice customer deposits while also looking to build trust and generate brand awareness. This is in contrast to bigger banks which can lean on their longer-standing legacy and customer loyalty.
Indeed, while the average rate paid by an easy access savings account dipped from 2.78% to 2.71% between May and June, the most competitive accounts in the sector currently pay in excess of 4.50% AER and can be found from challenger banks.
Importantly, all savings providers listed on our charts are covered by a depositor protection scheme which means, in the unlikely event they go bust, your money will be safe up to the £85,000 limit per person.
