Record number of savings accounts available as easy access rates tumble

Savers wanting to secure a competitive rate on their money now have more than 2,000 savings and ISA deals to choose from.

The number of savings accounts and ISAs on the market rose from 2,076 at the start of November to 2,117 at the start of December, according to the latest Moneyfacts UK Savings Trends Treasury Report.

This is the highest count since Moneyfacts’ records began in February 2007 and compares to just 1,918 products one year ago.

Within the total of 2,117, the number of savings accounts rose to 1,542 while the number of cash ISAs increased to a record high of 575.

“The savings landscape has changed significantly over the years and a rise in product choice can instil an optimistic view for savers who need different types of accounts to suit various needs,” commented Rachel Springall, Finance Expert at Moneyfacts.

“Challenger banks have notably worked hard this year in injecting some healthy competition into the market, with their intent to draw in funds for their future lending,” she explained.

For example, Vida Savings launched into the savings market this month with a competitive one-year bond.

However, despite the rising choice of products, savings rates have continued to plummet in the wake of the cut to the Bank of England base rate in November.

Easy access rates plunge

Unsurprisingly, many savings providers cut rates throughout November, particularly on their variable accounts.

As a result, this caused the average easy access savings rate to fall from 3.03% in November to 2.95% in December, and the average easy access cash ISA rate to fall from 3.24% to 3.15% over the same period.

These were the largest monthly drops since June 2020, and both of these average rates now sit at their lowest points since September 2023.

“Easy access accounts have been the casualty from cuts to the Bank of England base rate; the average rate has felt its biggest monthly drop in over four years. As murmurs continue of more cuts to base rate next year, variable rate accounts could be doomed to drop further,” Springall warned.

But, despite the fall in average rates, it’s still possible to find several easy access savings accounts paying in excess of 4.50% AER, with the leading account paying 4.85% AER.

Meanwhile, the top easy access ISA currently pays an even higher rate of 5.18% AER, courtesy of the Plum Cash ISA.

Mixed picture for fixed accounts

While variable rates fell across the board, longer-term fixed accounts (with terms over 550 days) fared better.

For example, the average longer-term fixed-rate bond inched higher from 3.89% to 3.90% in the month to December, while the average longer-term fixed ISA saw a larger increase from 3.84% to 3.89%.

Savers will also be pleased to see the average one-year ISA rate hold steady at 4.06% in December.

However, after several providers withdrew products and lowered rates throughout the past month, the average rate on one-year bonds fell by 0.06 percentage points to 4.18% between November and December.

Because of these changes, the gap between the one-year accounts and their longer-term equivalents is now the smallest it has been since September 2023.

Is it worth switching savings?

With average rates on a downwards trend, and with expectations that they will continue to fall in 2025, savers may not think it’s worth switching their savings.

But this would be a mistake, as some providers are still increasing rates, and the leading savings accounts and ISAs continue to pay competitive returns.

Even though rates may be lower than they have been in previous months, it’s still worth putting your money into a higher-paying account rather than allowing it to languish in an account paying little-to-no interest.

For example, if you took out a fixed-rate bond or ISA that recently ended, it’s important to be proactive about where you deposit this money, otherwise the provider may automatically put it into one of its low-paying easy access accounts.

Similarly, if you haven’t reviewed your savings and moved accounts over the past few years, you may be surprised at how little interest your account is paying compared to the rates currently on offer.