Savings News

After a quiet August the savings market picked up in September, with many providers launching new products. Although Al Rayan Bank’s easy access account is no longer offering its headline-making rate of 1.60% AER, there are a number of accounts launched in September that are still available on the chart today.

Of the new accounts launched, these are the ones that are still available:

• SAGA Easy Access Savings Account pays 1.39% monthly, including a 0.25% bonus for 12 months. This account requires an opening deposit of just £1 and allows unlimited further additions and withdrawals. Also still available is SAGA 1 Year Fixed Rate Saver paying 1.15%. This account also requires an opening minimum deposit of £1 and allows further additions within 14 days of account opening. Earlier access is permitted on closure only and subject to 90 days’ loss of interest if closed after 90 days, or, if closed within the first 90 days, it charges a fee equal to the interest accrued. Both accounts can only be opened online, but can then be managed by phone as well.
• Chorley Building Society’s Easy Access Saver Issue 3 pays 1.05% yearly on a deposit of £500. This account allows unlimited further additions, but restricts withdrawals to two per account year; a lower rate is paid for the remainder of the year if more than two withdrawals are made. It can only be opened with new money to the institution, and can be opened and managed in branch and by post.
• Charter Savings Bank’s Easy Access Postal – Issue 14 pays 1.35% yearly on a deposit of £5,000. This account allows further additions and withdrawals, and can be opened online and by post, then managed by post. There is also a version that pays interest monthly at a slightly reduced rate.
• Kent Reliance’s Branch & Online Easy Access – Issue 35 pays 1.43% on an opening deposit of £1,000. It allows further additions and withdrawals are permitted, but the method is dependent on how the account is opened. It can be opened and managed online and in branch. This account has a version that pays interest monthly at a slightly lower rate.
• Coventry Building Society’s Regular Saver pays 2.50% on anniversary on an opening deposit of just £1. To open this account, the money must be new to the institution. It allows a maximum monthly deposit of £500 and after the 12-month term has ended, it reverts to an Easy Access Saver (6). This account can be opened in branch, online, post and by phone, and then managed online and by phone.
• Principality Building Society’s Triple Access Saver pays 1.00% yearly on an opening deposit of £1, increasing to 1.25% on a deposit of £25,001. This account allows unlimited further additions, but withdrawals are restricted to three per calendar year, including closure. This account can only be opened in branch, but can be managed by post as well.
• UBL UK’s 90 Day Ameen Islamic Notice pays an expected profit rate of 1.00% half yearly. This account requires an opening deposit of £1 and allows unlimited further additions. Withdrawals are permitted subject to 90 days’ notice. Early access is also allowed, but subject to a 50% reduction in total profit calculated. This account can be opened and managed in branch and by post.
• Union Bank of India (UK) Ltd’s Fixed Rate Deposit pays 1.82% yearly on an 18-month term. This account requires an opening deposit of £1,000. It can be opened and managed in branch and by post.
• Arbuthnot Direct’s 5 Year Fixed Term Deposit Issue 2 pays 2.00% on anniversary for a five-year term on an opening deposit of £10,000. It allows further additions within 14 days of account opening, and can only be opened and managed online.
• Yorkshire Building Society’s Fixed Rate Bond to 31.10.21 pays 1.35% yearly on a term that lasts until 31 October 2021. This account requires a £1,000 opening deposit and allows further additions. It can be opened in branch and by post, and then managed online as well. There is also a version of this account that pays interest monthly at a slightly lower rate.
• West Brom Building Society’s 1 Year Fixed Rate Bond pays 1.05% on maturity, its 2 Year Fixed Rate Bond pays 1.10% yearly, and its 3 Year Fixed Rate Bond pays 1.15% yearly. All these accounts require a £1,000 opening deposit and allow further additions. The one-year version has a maturity date of 30 September 2020, the two-year version has a maturity date of 30 September 2021, and the three-year version has a maturity date of 30 September 2022. They can only be opened and managed in branch, and there are versions of all accounts that pay interest monthly at a slightly lower rate.
• Mansfield Building Society’s 3 Year Fixed Rate Bond (39^th Issue) pays 1.40% yearly on an opening deposit of £500. This account allows further additions, and can be opened and managed in branch and by post.
• Secure Trust Bank’s 1 Year Fixed Rate Bond pays 1.65% yearly, its 2 Year Fixed Rate Bond pays 1.75% yearly, its 3 Year Fixed Rate Bond pays 1.80% yearly, and its 4 Year Fixed Rate Bond pays 1.85% yearly. The one-year version has a maturity date of 11 November 2020, the two-year version has a maturity date of 11 November 2021, the three-year version has a maturity date of 11 November 2022, and the four-year version has a maturity date of 10 October 2023. All these accounts require a £1,000 opening deposit and allow further additions for 30 days from account opening, or by
• ICICI Bank UK’s Raisin UK – 45 Day Notice Account pays 1.39% monthly on a £1,000 opening deposit. Further additions are not allowed, and only withdrawals of the full account balance are permitted, subject to 45 days’ notice and account closure. Its Raisin UK – 95 Day Notice Account pays 1.59% monthly on a £1,000 deposit. Again, further additions are not allowed, and only withdrawals of the full account balance are permitted, subject to 95 days’ notice and account closure. Both accounts can only be opened online, and then managed by post and phone as well.
• Bank and Clients’ Raisin UK – 9 Month Fixed Term Deposit pays 1.70% on maturity and Raisin UK – 1 Year Fixed Term Deposit pays 1.76% on maturity. Both accounts require a £1,000 minimum deposit, and can only be opened online, and then managed online, by post and by phone.
• Moneybox’s 95 Day Notice Savings Account pays 1.65% monthly on a £1 deposit and allows further additions. Withdrawals are subject to 95 days’ notice. It can only be opened and managed via mobile app.
• Secure Trust Bank’s 30 Day Notice Account pays 1.10% quarterly, its 45 Day Notice Account pays 1.15% quarterly, its 60 Day Notice Account pays 1.19% quarterly, its 90 Day Notice Account pays 1.24% quarterly, its 120 Day Notice Account pays 1.29% quarterly, and its 180 Day Notice Account pays 1.34% quarterly. All these accounts require a £1,000 deposit to open. They allow further additions, but withdrawals are restricted to four interest and three capital withdrawals per annum, subject to the notice term of the account. They can be opened online, and then managed online and phone.
• PCF Bank’s 4 Year Term Deposit Issue 8 pays 2.00% on anniversary on a deposit of £1,000. This account allows further additions within 14 days of account opening, and can be opened online and by post, and then managed online, by post and by phone.    

Savers are being hit by falling fixed savings rates as 39% of fixed rate bonds providers cut rates or withdrew products from the market during September, compared to just 12% of providers that launched or increased rates during the month, the latest research by Moneyfacts.co.uk shows.

The research reveals that this has led to a significant drop in the returns available across all fixed rate bonds. For example, the average longer-term fixed bond rate (1.59%) fell to its lowest point since August 2017, when it stood at 1.57%. While the average one-year fixed bond rate (1.29%) is at its lowest level since June 2018, when it stood at 1.28%.

Saying this, there is some good news for savers as the proportion of fixed rate bond providers overall that removed their products from sale or cut rates stands at 39%, down slightly from 44% in August and 40% in July.

Savings market analysis 

*Longer-term fixed bonds are those with terms over 550 days. 

Rachel Springall, finance expert at Moneyfacts, said: “Savers will need to be quick off the mark to secure a competitive fixed rate bond as interest rates are tumbling. In fact, there were more fixed rate bond providers that cut or withdrew their deals during September than improved or launched.

“Indeed, there appears to be a race downwards in the top rate tables, as fixed rate providers find themselves in a prominent position that may not be sustainable. Already this month, Wesleyan Bank launched a lucrative 18-month bond that paid 2%, but was on the shelf for just one day.

“This doesn’t necessarily mean that challenger banks are leaving this market though, as it is clear to see from the top rate tables that many hold the highest positions and very few withdrew their range compared to making cuts in September. However, what is noticeable is that longer-term fixed bond returns are falling fast.

“During a period of economic uncertainty, it could well be the case that savers are more inclined to invest for a shorter term, or indeed into a pot that is instantly more accessible. Therefore, if and when the fixed savings market improves, it could be more common to see providers compete in the one-year fixed bond market.

“In fact, with a rate discrepancy of just 0.30% between the average one-year term and longer-term fixed rate bond, this may not be as much of a driver to entice savers into the commitment of a longer-term deal. As it stands, savers would be wise to keep a close eye on the market as it is uncertain how long these cuts will last.”

This week saw several changes throughout the savings charts, most notably with Cynergy Bank restricting the opening of its easy access account to existing customers only which resulted in it dropping out our chart. Savers will be pleased to see new entries to the top of the 30 day and 60 day notice charts paying higher rates than last week. Overall, savers will still have to lock their money into a fixed rate savings account in order to get the best savings rates available, however both the easy access and notice charts remain competitive this week, with last week’s top rates still available.

Now that we are in the midst of the autumn ISA season, this is traditionally a time for savers to start hunting around for a good ISA deal, however, as the collapse of London Capital & Finance (LCF) earlier this year showed, savers need to be careful that they are not risking their savings by depositing money into a high-risk ISA.

ISAs have now been around for over 20 years and during that time they have gone from a simple, straightforward tax-free savings product, into today’s complicated ISA market. Savers wanting to deposit money into an ISA can choose from a wide range of products, including variable ISAs, fixed rate ISAs, Help to Buy ISAs and Lifetime ISAs – and these are just the different types of cash ISAs available.