First Direct is boosting the rate on its regular savings account to 7 per cent from tomorrow.
You must hold a First Direct current account and be able to pay in up to £300 a month.
Meanwhile, its parent bank, HSBC, is raising its two-year fixed-rate savings deal from tomorrow.
Rate hikes: First Direct is boosting the rate on its regular savings account to 7% while, its parent bank, HSBC, is raising its two-year fixed-rate savings deal from tomorrow
Its two-year fixed-rate account will increase by 1.25 percentage points to 3.75 per cent, with a minimum deposit of £2,000.
The bank is also waiving early closure fees on fixed-rate savings accounts, giving full access early to either withdraw or move to a better deal.
From December 1, its 12-month fixed-rate Regular Saver interest rate will also increase from 1 per cent to 5 per cent.
Customers can deposit up to £250 per month and interest will be paid at the end of the year. Many challenger banks offer above 4.6 per cent for a two-year fix, including Investec’s 4.75 per cent deal.
Fixed-rate deals have soared this year. Two-year rates were, on average, paying only 0.54 per cent interest in January.
Last month, rates hit the highest level since 2009 at 3.55 per cent, Bank of England data shows.
Savers have rushed to lock into higher rates, as a record £11.3 billion was saved in fixed deals last month — four times as much as was invested the previous month.
Experts say a large chunk of this money is likely to have been shifted over from lower-paying easy-access accounts.
HSBC has also increased interest rates on its Isa accounts by 0.9 percentage points, while its Premier Loyalty account will pay 2.5 per cent.
