Last week, the Bank of England unexpectedly cut base rate by 0.50% (50 base points), which has resulted in average saving rates dropping by as much as 0.13% in just one week.
In fact, comparing the average rates on the Tuesday before base rate was cut from 0.75% to 0.25% to the Tuesday after the cut, we have found that the average rates on easy access, notice accounts, cash ISAs, and one, two, three, four and five year fixed rate bonds have all fallen week-on-week.
|Type of account||Average rate on Tuesday 10 March 2020||Average rate on Tuesday 17 March 2020|
|1 Year Fixed Rate Bond||1.16%||1.11%|
|2 Year Fixed Rate Bond||1.23%||1.18%|
|3 Year Fixed Rate Bond||1.36%||1.32%|
|4 Year Fixed Rate Bond||1.53%||1.40%|
|5 Year Fixed Rate Bond||1.55%||1.50%|
Fortunately for savers, while average rates have been falling, there are still some highly competitive savings rates on the market. However, with the possibility of another base rate cut to help ease the financial pressure caused by the outbreak of Covid-19, savers should consider snapping up the top saving rates sooner rather than later to ensure that they do not miss out.
Savers looking to lock their money into a fixed rate bond will find that PCF Bank offers the best rate overall with its 7 Year Term Deposit Issue 11 paying 2.15% gross. This account requires a deposit of £1,000 to open and can be opened online or by post and then managed online, by post and by phone.
Despite the base rate cut, the five year fixed rate chart has remained highly competitive, with Gatehouse Bank offering an expected profit rate of 2.00% gross on its Fixed Term Deposit. To open this account, a £1,000 minimum deposit is needed and it can only be opened and managed online.
For those still happy to lock their money away but want to be able to access it after a short time, 18 month and one year bonds are good options. My Community Bank offers the top rate for both these terms with its 18 Month Fixed Term Savings Account paying 1.70% gross and 12 Month Fixed Term Savings Account paying 1.60% gross. These accounts are available to everyone who satisfies Community Bank’s Common Bond requirements which cover membership of a wide range of occupations and organisations. To open either of these accounts, a deposit of £1,000 is needed. They can be opened online or by post and then managed online, by post and by phone.
The best rate available on a one year bond that requires an opening deposit of less than £10,000 and without any opening restrictions is currently being offered by Shawbrook Bank , which pays 1.55% gross on its 1 Year Fixed Rate Bond Issue 62. To open this account, a £1,000 deposit is needed. It can only be opened online but can be managed online and by phone. There is also a version of this account that pays interest monthly at a gross rate of 1.54%.
Easy access accounts are often the first to see a fall in rates after a base rate cut, but there was good news for savers as the top rates in the charts have remained. Cynergy Bank offers a top paying easy access account with its Online Easy Access Account – Issue 27 paying 1.31% gross, which includes a 0.56% bonus for 12 months. To open this account, a deposit of just £1 is required. It allows unlimited further additions and withdrawals, although withdrawals must be made via a nominated account. It can only be opened and managed online.
Virgin Money also offers a top easy access rate with its Double Take E-Saver Issue 14 paying 1.31% gross. This account requires a deposit of just £1 to open. It allows unlimited further additions but restricts withdrawals to two withdrawals per calendar year including closure. This account can only be opened online and also offers a version that pays interest monthly at a gross rate of 1.30%.
As expected, the best ISA rate overall comes from a fixed rate ISA. United Trust Bank offers the top ISA rate on its ISA 7 Year Bond, which pays 1.85% gross. This ISA locks money into a seven-year term and requires a minimum deposit of £15,000 to open. It can only be opened by post and then managed by post and by phone.
The best five year fixed ISA rate is currently being offered by Hodge Bank, which pays 1.65% gross on its 5 Year Fixed Rate Cash ISA. Savers wanting to open this ISA will need a £1,000 minimum deposit. It can be opened online or by post and managed by post and by phone. It also offers a version that pays interest monthly at a gross rate of 1.64%.
Savers looking to lock their money into a short-term fixed ISA will find that Virgin Money offers the top rate on an account without any opening restrictions. Both Virgin Money’s 1 Year Fixed Rate Cash E-ISA Issue 416 and its 1 Year Fixed Rate Cash ISA Issue 442 pay 1.36% gross. They both require a minimum deposit of just £1 to open. The 1 Year Fixed Rate Cash E-ISA Issue 416, which matures on 24 February 2021, can only be opened and managed online, while 1 Year Fixed Rate Cash ISA Issue 442, which matures on 15 March 2021, can be opened in branch, by post or by phone and then managed in branch and by post. There are also versions of both ISAs that pay interest monthly at a gross rate of 1.35%.
For those looking for an easy access ISA, Al Rayan Bank offers a highly competitive option with its Instant Access Cash ISA paying an expected profit rate of 1.35% gross. To open this ISA, a £50 deposit is needed. It allows unlimited further additions and withdrawals and can be opened online, in branch, by post, by phone and via its mobile app.
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.