Savers urged to take advantage of intensifying savings competition

With April bringing a collective hike to all average savings rates, consumers have more opportunity to maximise returns.

As we make our way through May, the outlook for savers continues to be optimistic as last month saw the average ISA and non-ISA rates rise across the board, according to data from the latest Moneyfacts UK Savings Trends Treasury Report.

This marks the first time all rates have risen in the same month since September 2023.

“These meaningful shifts could prompt savers to review where their cash is held,” Caitlyn Eastell, Personal Finance Analyst at Moneyfacts, commented.

The margin between one-year and longer-term fixed rates slims

Encouragingly, the average one-year fixed savings rate rose month-on-month to 4.05% at the start of May – its highest rate in a year – and the longer-term average fixed rate (accounts with terms of over 550 days) climbed to 4.08% (its highest figure since August 2024).

Fixed ISAs increased to pay even higher rates, with the average one-year fixed ISA jumping from 4.01% at the beginning of April to 4.17%, its highest level since October 2024, while the longer-term fixed ISA increased to 4.14% (its highest since January 2024).

“ISA savers continue to gain an edge, as both one-year and longer-term ISA rates outperform their non-ISA counterparts, meaning savers may no longer need to compromise between competitive returns and tax efficiency,” Eastell explained.

“The margin between one-year and longer-term fixed rates has slimmed to just 0.03% and may give savers extra incentive to lock in for longer,” Eastell continued. And with fixed rate products lingering for longer, as the average shelf-life rises to 43 days, this suggests providers are “more comfortable holding attractive deals despite shifting interest rate expectations”, Eastell added.

What’s more, in yet another encouraging shift for savers, this is the first time since April 2025 that all fixed savings and fixed ISA rates have gone above 4%.

Product choice reaches record high

Product choice soared to 2,540 savings deals (including ISAs) at the beginning of May, the highest on Moneyfacts’ records, meaning now could be a good time to review your accounts and switch for better returns.

“Growing product choice is always welcome news, and for the first time since November 2022 more than half of all savings accounts now pay above the Bank of England Base Rate,” Eastell highlighted.

“Savers should take advantage of the intensifying competition, and the continued rise in rates presents a valuable opportunity to maximise returns, particularly for those still holding cash in low-paying accounts,” she added.