SAVERS could give their money a huge boost by switching account as savings rates soar.
Last week the Bank of England hiked interest rates again, taking the base rate from 4.25% to 4.5%.
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A wave of new best buy savings accounts have launched since, with the best rate on offer from First Direct paying 7%.
Building societies Yorkshire, Coventry and Skipton all passed on the full 0.25% to savers on variable rates.
Challenger banks Monzo and Chase also confirmed their savings rates will rise.
But not all banks and building societies are passing on higher rates to customers.
And if your cash is in an old account, you could be earning as little as 0.01% interest.
Lucinda O’Brien, personal finance expert at Money.co.uk, explained what the best deals are and what to think about before opening an account.
Regular saving
The top rate for a regular saver is from First Direct at “a mighty 7%” said Lucinda, but this is only available for existing customers.
She said: “The interest is fixed for 12 months and you can save between £25 and £300 a month, so it’s perfect if you would like to save little and often.”
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Lucinda also pointed to customers with a TSB current account who can save into its monthly savings account with a fixed interest rate of 5% for one year.
This regular saver requires you to save between £25 and £250 a month by standing order and you can access the money whenever you wish.
Lucinda said: “The good news is that these rates are comparable to what banks are offering new customers.
“Yes, they might not reach the heights of First Direct’s 7% but some come close.”
NatWest‘s Digital Regular Saver has an interest rate of 6.17% on the first £5,000.
“This account allows you to save between £1 and £150 a month, so not as much as the previous accounts,” Lucinda said.
“But it’s still worth a look if you want to get into the habit of saving.”
Halifax’s regular saver beats TSB at 5.5% and you can save a similar amount with between £25 and £250 deposited into the account each month.
Easy and instant access accounts
There are some more great deals for existing customers, Lucinda said.
Barclays‘ Rainy Day Saver is a good option if you are a member of Barclays Blue Rewards as it has an interest rate of 5.12% on balances up to £5,000.
Lucinda said: “It also gives you instant access to your money and you can manage the account using its app, online banking, by phone or in a branch.
“The only snag is the limit of £5,000, as if you have more money to save there might be better options in the market.”
If you have a Private Current Account or Current Account Tracker with Virgin Money, then you can open a Private Savings Account.
This has a variable rate of 4.06% to 4.58% depending on how much you can save.
Lucinda warned that only savers with more than £1million can get the higher rate though.
She added: “You can still get a rate of 4.06% on balances from £0 to £499,999, withdrawals are also allowed and no notice is required.”
Savings and budgeting app Chip is currently offering an instant access account which is open to anyone at 3.71%.
You can save up to £250,000 and the money can be accessed at any time, so there are no worries about withdrawal fees.
Yorkshire Building Society Rainy Day Account is an easy access account open to all with an interest rate of 3.6% on balances of £1 up to £5,000.
“If your balance is more than £5,000 then the interest decreases to 3.1%,” Lucinda explained.
“It also has less flexibility as it only allows withdrawals on two days per account year.”
Fixed-rate savings accounts
All the best fixed rate savings accounts are free for anyone to open and not reserved for existing customers only, Lucinda said.
For example, Raisin UK Isbank UK’s one-year fixed term deposit is at 5% with a minimum deposit of £1,000 and no withdrawals before the end of the term.
“This is currently a market-leading rate if you are prepared to lock away your money for a year,” Lucinda said.
My Community Bank’s one-year fixed term deposit is close behind at 4.87% and you can also open it with a deposit of £1,000.
No withdrawals are allowed until the fixed term ends.
Lucinda said: “Overall, there are some fantastic deals available to existing customers, so it’s always worthwhile exploring what your bank is currently offering.
“But remember, if their savings accounts don’t fit the bill, don’t hesitate to look elsewhere as providers are constantly battling to get your attention.”
