It might not beat the excitement of beating Germany 2-0 at Wembley, but like England fans, Savers have reason to be cheerful too.
the Marcus Bank Savings Account by Goldman Sachs and the new Limited Access Saver of Coventry Building Society now offer savers an easy-to-access savings rate of 0.5%.
The move – given the low rates on offer in general – catapult the pair to the top of the This is Money independent best buy table.
Maximum rate: Goldman Sachs bank’s popular Marcus account will pay 0.5%, more than double the average easy-access rate of 0.17%
The average easy-to-access account pays just 0.17% interest, according to Moneyfacts. Many large banks offer savers as little as 0.01%.
James Blower, founder of The Savings Guru, says: “The steps taken by Marcus and Coventry to increase their easy access rates to 0.5% are important for the savings market.
“As a result of NS&I rate cuts last year, we saw billions in savings pouring into the market, causing rates to come down with best buy easy access rates dropping from 1% to 0 , 4%.
“Although the one-year fixed rates have improved since then, with four providers paying 1% or more, the easy access rates have not budged. “
Both accounts come with slight catches. The popular Marcus account comes with a 12 month fixed rate bonus of 0.1% on top of its current rate of 0.4%.
Those who open an account will automatically receive the 12-month fixed rate bonus of 0.1 percent as part of their interest rate.
Existing customers should also take advantage of the new bonus rate by signing up after logging into their account through the Marcus website.
Savers can set aside up to £ 250,000 while still being able to withdraw money from the account whenever they want.
Meanwhile, the Coventry account is limited access – but savers can dive into it six times a year without penalty. It is available for new and existing customers.
“As the Coventry account can be opened in branch, by mail or phone, as well as online, this is great news for more traditional savers who don’t like to bank online,” said Anna Bowes. , co-founder of Savings Champion. .
Both accounts can be opened with £ 1 and are protected by the Financial Services Compensation Scheme.
What does this mean for savers?
Over the past few months, the easy-access rate increases have been short-lived and the hope is that with two well-established names making the headlines, it could spark a more competitive spirit among suppliers and trigger offspring. rate increases.
“Charter Savings peaked at 0.5% 12 days ago, but before today’s move I expected this rate to last only a week at most,” Blower said.
“Marcus and Coventry have significant balance sheets of around £ 20bn and £ 36bn respectively, so they can cope with the inflows that will come from savers at these rates.
“This means they can maintain a period of time at the top of the market and will force other vendors to match or improve upon them. So I expect that we will see increases in other easy access fares as of tomorrow.
“I don’t think we will see rates go over 0.55%, so I would recommend savers to grab these offers when they become available.”
How can savers best fight inflation?
The inflation rate hit 2.1% last month due to soaring prices for fuel, food, drink and clothing.
There is currently not a single savings account that can exceed the eroding power of inflation, with many commentators predicting the worst is yet to come.
“If higher inflation and lower interest were to stay, you will soon see how quickly your cash flow erodes in real terms,” Bowes said.
“It’s a toxic combination – you are effectively earning a negative interest rate already, even without the Bank of England intervening in that territory.”
Most of the largest banks pay between 0.02% and 0.06% interest on their range of easy-to-access accounts, according to Moneyfacts, and as a result, savers could still benefit from having their money transferred to a provider. market leader.
“By choosing the best accounts available, you can at least mitigate the effects of inflation,” Bowes said.
“With inflation at 2.1%, even if you earn 0.5%, the real value of your money will have fallen to £ 49,216 after one year – and after five years it would only be worth £ 46,203 – it is a decrease in value of more than 7.5 percent.
But those who leave their money purified in a bank or an NS&I will feel the effect of inflation more than others, according to Bowes.
“If you let your money only earn 0.01%, a £ 50,000 deposit would have fallen to just £ 48,976 after one year, or £ 45,088 in real terms over five years, assuming an inflation rate of 2.10%, or 10% cent of your money will have been consumed by inflation, ”Bowes said.
Should savers consider fixed rate offers instead?
The best five-year fixed rate account, offered by Gatehouse Bank, currently pays 1.6% interest – but that requires your money to be locked in until 2026.
Savers opting for a shorter time horizon might consider the latest one-year fixed deal from Gatehouse Bank offering 1.1% or Shawbrook Bank and Oaknorth Bank, both offering 1% respectively.
“In terms of fixed rates, there is a significant premium on the one-year rates over the easy-access rates and savers who do not need to access their money for a year may well consider take the higher rates available there, ”Fan said.
“I don’t see any significant improvement in fixed rates from here, as the increases we’ve seen over the past two months come from a small selection of providers competing for the money.”
“Unless the broad market follows suit, I don’t see any lasting increases, so I think one-year rates probably aren’t going much higher than they are now.”
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