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The best ISA rates this week 21.01.21
Derin Clark

Derin Clark

Online Reporter
Published: 21/01/2021

ISA savers looking for a fixed account will be pleased to see that a new top rate has entered the fixed ISA chart this week. Those looking for the flexibility of an easy access ISA will see that both of last week’s top rates have remained in the charts, but only one of these ISAs does not have any opening restrictions. Many of the most competitive rates in both the easy access and notice ISA charts do have opening restrictions, so savers should be aware of any these when looking for the best deals.

Savers should also note that the rates below are the best rates available at 1pm on Thursday 21 January 2021 and, although correct at the time of publishing, they may not be available after this time.

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Inflation rises – what savings account can now beat inflation?

Today’s Consumer Price Index (CPI) figures reveal that inflation rose to 0.6% during December, an increase from 0.3% the previous month.

As a result of the rise in inflation, our research has found that there are now 214 standard savings accounts that can now match or beat inflation. Of these, 144 are fixed rate bonds, 51 are fixed rate ISAs, 13 are notice accounts, three are easy access accounts, and three are variable rate ISAs*.

Savers considering a fixed rate bond or ISA should keep in mind that the predicted rate for inflation during the final three months of 2021 is 2.1% and there are no savings accounts that can currently match or beat this rate. As such, if inflation rises as predicted, those locking into a fixed term account could find that their savings are eroded by inflation.

As fixed savings accounts rates remain low, many savers are turning to easy access accounts as an alternative option. The benefit of an easy access savings account is that it allows more flexibility than a fixed account and savers can access the funds within the account. Currently the top rate in the easy access chart can match today’s inflation rate, offering 0.60% AER, but savers should be aware that rates on these accounts can change at any time. As well as this, over the past year easy access accounts have seen a significant fall in rates and with the continued economic uncertainty and historic low Bank of England base rate, rates could fall further. As Rachel Springall, finance expert at Moneyfacts.co.uk, explained: “One of the most flexible savings vehicles is easy access accounts but they have been hit hard by rate cuts. Indeed, over the past 12 months the top deal has fallen by more than half, down from 1.40% to 0.60% – on a savings pot of £20,000 that’s a loss of interest of £160 over one year. As the economic outlook remains unpredictable and base rate keeps at a historic low, it would not be too unsurprising to see further cuts as providers adjust their market position in response to an influx of cash into sought-after deals.”

Although the savings market remains challenging, banks are still launching new chart-topping rates and savers should regularly check the savings charts to keep up-to-date with the best rates available. Springall added: “Despite the uncertain state of the market, it appears challenger banks and Islamic banks continue to take a firm place within the top rate tables, so any savers looking to acquire the best possible return would be wise to consider these less familiar brands. However, a word of caution to savers weighing up their options, the savings market remains erratic and a good deal doesn’t last long on the shelf, so quickness is key.”

 

*Based on a £10,000 deposit

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Saving rates fall to new historic lows – what options are available to savers?

It has not been a very happy start to 2021 for savers, as new data shows that average saving rates across all savings charts have fallen month-on-month and have hit new lows.

The research, which is due to be published in the Moneyfacts UK Savings Trends Treasury Report, found that average savings rates in all charts have fallen between 1 December 2020 and 1 January 2021 and now stand at the lowest level since our electronic records began in 2007.

As the table below shows, year-on-year has seen a significant fall in saving rates. Although the average easy access savings account rate is the lowest available across all charts, this rate has seen the smallest fall of all average rates, down by 0.41% year-on-year, from 0.59% on the 1 January 2020 to 0.18% on the 1 January 2021. Saying this, 0.18% sits well below inflation, which means that savers depositing their money into an easy access savings account in the long-term will likely see inflation eroding their hard-earned savings. As well as this, as many parts of the UK are once again in lockdown, those with excess disposable incomes are likely to increase their savings, which could in turn see savings rates fall further. As Rachel Springall, finance expert at Moneyfacts.co.uk, explained: “This latest lockdown could mean a further demise in savings rates on offer as providers may struggle to cope with demand and fill their desired subscription targets much too quickly.”

 

Savings market analysis – average rates
  January 2020 December 2020 January 2021
Average easy access rate 0.59% 0.19% 0.18%
Average easy access ISA rate 0.85% 0.27% 0.25%
Average notice rate 1.03% 0.47% 0.40%
Average notice ISA rate 1.12% 0.50% 0.44%
Average one-year fixed rate bond 1.20% 0.54% 0.49%
Average longer-term fixed rate bond* 1.48% 0.77% 0.70%
Average one-year fixed rate ISA 1.15% 0.52% 0.47%
Average longer-term fixed rate ISA* 1.37% 0.68% 0.62%

*Longer-term fixed bonds or ISAs are those with terms over 550 days. Average interest rates based on a £5,000 deposit as at the start of the month. Source: Moneyfacts Treasury Reports

 

It is not just new savers who will be disappointed with the falling saving rates, but those who have money in a fixed rate account or ISA that is maturing soon may struggle to find a new competitive rate. Here we take a look at what options are available to savers.

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The best savings rates this week 15.01.21

Savers looking for a fixed rate bond will be pleased to see that new higher rates entered the five, three and two year fixed rate bond charts this week. The top rates in last week’s easy access and notice charts remained available this week. Overall, the savings market remains challenging. Savers should regularly check the charts for new top rates and act quickly to avoid missing out.

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The best ISA rates this week 14.01.21

There was little change at the top of the ISA charts this week, with many of last week’s top rates still available in the charts. With the continued economic uncertainty, it is unlikely that ISA rates will see significant improvement over the next few weeks, but ISA savers should regularly check the charts in case a new top rate is launched.

Savers should be aware that the rates below are the best rates available at 1pm on Thursday 14 January 2021 and, although correct at the time of publishing, they may not be available after this time.

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Recent News

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The best savings rates this week 08.01.21

8th January 2021

Challenger banks continue to dominate the savings charts as we enter 2021. Savers hoping that the new year will lead to providers offering higher rates across the savings charts will be disappointed

Challenger banks continue to dominate the savings charts as we enter 2021. Savers hoping that the new year will lead to providers offering higher rates across the savings charts will be disappointed

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The best ISA rates this week 07.01.21

7th January 2021

The start of 2021 has not resulted in much change at the top of the ISA charts, instead savers will find the majority of top rates available at the end of 2020 remaining in the charts this week

The start of 2021 has not resulted in much change at the top of the ISA charts, instead savers will find the majority of top rates available at the end of 2020 remaining in the charts this week

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Is it worth switching your savings account to a higher rate in 2021?

6th January 2021

2020 ended with savings rates at historic lows but will 2021 bring better rates for savers and is it worth switching your savings account?

2020 ended with savings rates at historic lows but will 2021 bring better rates for savers and is it worth switching your savings account?

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2020 savings interest rates review

21st December 2020

Savers hoping to see savings rates starting to improve during 2020 had their hopes dashed in March when the Bank of England cut base rate to a historic low of 0.1% in response to the economic uncertainty caused by the Coronavirus

Savers hoping to see savings rates starting to improve during 2020 had their hopes dashed in March when the Bank of England cut base rate to a historic low of 0.1% in response to the economic uncertainty caused by the Coronavirus

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Most Popular Savings News

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The best savings rates this week 15.01.21

15th January 2021

Savers looking for a fixed rate bond will be pleased to see that new higher rates entered the five, three and two year fixed rate bond charts this week

Savers looking for a fixed rate bond will be pleased to see that new higher rates entered the five, three and two year fixed rate bond charts this week

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Inflation rises – what savings account can now beat inflation?

20th January 2021

Today’s Consumer Price Index (CPI) figures reveal that inflation rose to 0.6% during December, an increase from 0.3% the previous month

Today’s Consumer Price Index (CPI) figures reveal that inflation rose to 0.6% during December, an increase from 0.3% the previous month

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The best ISA rates this week 14.01.21

14th January 2021

There was little change at the top of the ISA charts this week, with many of last week’s top rates still available in the charts

There was little change at the top of the ISA charts this week, with many of last week’s top rates still available in the charts

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The best ISA rates this week 18.06.20

18th June 2020

Although inflation falling to 0.5% will offer a little relief to savers, on the whole, the savings market remains highly challenging, with just two easy access ISAs offering rates above 1.00%

Although inflation falling to 0.5% will offer a little relief to savers, on the whole the savings market remains highly challenging with just two easy access ISAs offering rates above 1.00%

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