Highest easy access savings rate in over 12 months

Competition at the top of the easy access savings chart is increasing, with the top rate rising by 0.08% in just a few weeks.

At the beginning of the month the top easy access savings account rate stood at 0.67% AER, whereas now savers can earn 0.75% AER on Aldermore’s Double Access Account Issue 1.

This account requires a £1,000 minimum deposit but does come with the catch of savers only being allowed to make two withdrawals per annum, with a lower interest rate being paid if more are made.

The next two best rates in this chart have also increased over the last few weeks. From today, Investec Bank plc pays 0.71% AER on its Online Flexi Saver, which requires a £5,000 minimum deposit to open and allows unlimited withdrawals.

Meanwhile, Cynergy Bank pays 0.70% AER on its Online Easy Access Account (Issue 43), which includes a 0.40% bonus for 12 months. A minimum deposit of just £1 is needed to open this account and unlimited withdrawals can be made via a nominated account.

As well as this, at the beginning of the week the average easy access savings rate increased from 0.19% to 0.20%, the highest it has stood in 12 months with it lasting standing at 0.20% on 30 November 2020.

Normally, a Bank of England base rate increase will impact easy access savings account rates as these accounts are on variable rates and usually rise and fall in line with base rate as a result.

Over the last month there has been speculation that the Bank of England will increase base rate to help control rising inflation, although no rate rise has yet been announced. Derek Sprawling, savings director at Paragon Bank, explains that this could have contributed to rising easy access account rates.

He said: “The pricing across the savings market, including across easy access products, has been on an upward trajectory for some months. We have seen easy access rates reach new highs in the last week, which haven’t been seen since pre-pandemic.

“Some of the factors influencing this have been consistent for a number of weeks. The anticipation of an upcoming Bank of England base rate increase has contributed to this, however it is important to note that the savings market is forward looking and that rates in the best-buy tables have not been reflective of the current base rate for a while.

“Another factor influencing rates could potentially be that January tends to be a busy period for outflows across the market, as people pay off credit from the festive period and prepare for the tax season, so banks will be competing to attract deposits in the run-up to this period.”

With easy access savings accounts offering record low rates over the last 20 months and many high street banks continuing to pay interest from as little as 0.1%, savers should consider switching now to a better paying account.

For example, a saver with £5,000 in an easy access paying 0.1% would earn just £5 in interest per year. If this saver switched to the current top rate of 0.75%, on the same deposit they would earn £37.50 – an increase of £32.50 simply by switching accounts.