Record number of providers offer savings accounts: Is it time you found a new home for your cash?

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.

Get a guaranteed rate with a fixed bond

With the average rate paid by a notice account also falling by a considerable 0.11 percentage points to 3.67% month-on-month, variable rates are at their lowest in almost two years. Savers worried about returns declining further may instead want to consider locking away their cash in a fixed rate bond.

The average one-year bond currently pays 4.01% after dropping 0.10 percentage points in the month to June. Meanwhile, the rate paid by a typical longer-term fixed bond (of more than 550 days) fell from 3.94% to 3.90% over the same period.

Nevertheless, the appeal of this type of account is you’re guaranteed to receive the same interest rate throughout the entirety of a term - regardless of market fluctuations.

Challenger banks also dominate the fixed sector. JN Bank’s Fixed Term Savings Account offers the leading two-year fixed rate of 4.42% AER, while Birmingham Bank tops our three- and five-year fixed charts with its 3 Year Fixed Rate Bond – Issue 26 and 5 Year Fixed Rate Bond – Issue 22 paying 4.45% AER and 4.47% AER, respectively.

Alternatively, those wanting to test the water with a shorter term will find Cynergy Bank offers the best up to one-year and one-year fixed rate with its Fixed Rate Bonds paying 4.47% AER and 4.50% AER, respectively.

Cash ISAs still “highly sought after”

Despite the average rates paid by cash ISAs similarly suffering declines across the board in the month to June, they remain “highly sought after” among savers who deposited a record £14 billion into the tax-free accounts throughout April.

“The noise surrounding cash ISA reforms and the rush of savers looking to protect their hard-earned cash from tax would have been a key influence in the significant deposits,” said Springall.

She added that ISA popularity is “expected to linger” as millions of people are forecast to pay higher-rate tax at 40% in the 2025/26 tax-year and encouraged those reviewing their pots or shopping around for a new deal to “take full advantage” of their allowance.

While the average returns on an easy access ISA dipped below 3% to 2.98% at the start of June, savers can find accounts offering as much as 5.46% AER on our charts.