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

Derin Clark

Online Reporter
Published: 18/01/2021

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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The best savings rates this week 08.01.21

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 to see that there has not been much movement at the tops of the charts since December, and it is unlikely that rates will increase significantly at the beginning of 2021. Saying this, new higher rates are still entering the charts, but these rates often do not last for long and savers should act quickly to secure the best rates while they are available.

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The best ISA rates this week 07.01.21

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. As the economic uncertainty caused by the pandemic continues, it is unlikely that rates will rise significantly over the coming weeks, but savers looking to get the best ISA rates should regularly check the ISA charts and act quickly if any new top rates enter the charts.

Savers should be aware that the rates below are the best rates available at 1pm on Thursday 7 January 2021 and, although correct at the time of publishing, they may not be available after this time.

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