Savings deposits soar in October: Is it time to review your accounts?

Despite falling rates, savers added billions to their savings in October.

October saw a major boost to the amount held in savings, as savers put an additional £20.2 billion into a range of accounts throughout the month, according to the latest Money and Credit release from the Bank of England.

Excluding the period of COVID, when many individuals were able to put their unspent money into savings during lockdown, this was the largest monthly increase to household savings on record.

Even when you take the COVID months into account, the last time this much was deposited into savings was December 2020 (£21.7 billion).

The majority of October’s deposits went into easy access savings, with households adding an extra £14.4 billion to these accounts. This is the highest increase since March 2021.

Many savers are also continuing to take advantage of their tax-free ISA allowance as they deposited £3.1 billion into ISAs during October.

“Prior research conducted by the Bank of England revealed there is currently £252 billion sitting in UK current or savings accounts earning no interest. So, it is a promising sign that consumers are taking charge of their future and taking a more proactive approach to their savings pots,” commented Caitlyn Eastell, spokesperson at Moneyfactscompare.co.uk.

Popularity of easy access

With October seeing the highest level of deposits into easy access savings in more than three and a half years, it’s clear that these accounts remain popular with savers.

“The boom in easy access accounts may be attributed to the fact that savers have been able to receive a higher return in comparison to one-year fixed bonds, which have been seeing vicious cuts since the first cut to base rate earlier this year,” Eastell pointed out.

For example, the leading easy access rate is currently 4.85% AER, compared to the leading rate on one-year bonds at 4.80% AER.

And savers can get even higher rates if they choose an easy access ISA, with the Plum Cash ISA paying the market-leading rate of 5.18% AER.

Easy access accounts are also popular for the flexibility they offer. Unless providers set their own restrictions, these accounts typically allow you to add to and withdraw from your savings as and when you choose, which makes them an ideal place to start building up a financial cushion and to store an emergency fund.

Have you reviewed your savings?

It’s encouraging to see savers putting their money into accounts that offer a competitive return on their deposits, instead of leaving it sitting in their current accounts.

But many people could be making their money work harder for them by reviewing their existing accounts and switching to a higher-paying provider.

Despite average easy access rates falling from 3.03% at the start of November to 2.96% at the start of December, there are still plenty of opportunities to secure an attractive deal.

“However, savers would be wise to act with haste because, despite October’s inflation figures being higher than expected, there are still some mutterings of potential cuts to base rate in 2025 which will impact variable rates,” Eastell urged.