Households Increase Excess Savings By 51 Billion | moneyfacts.co.uk

Moneyfacts.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfacts.co.uk will always be from news@moneyfacts-news.co.uk. Be Scamsmart.


Derin Clark

Derin Clark

Online Reporter
Published: 15/12/2021

The amount of excess savings held by UK households has increased from £112 billion in January to £163 billion in October, research from Investec reveals.

Figures released today show that inflation has risen to 5.1% and experts expect it to increase further next year. As such, savers with excess savings should ensure that they deposit their savings in the best paying accounts to mitigate the impact rising inflation will have on the value of their savings in real terms.

How to get the best savings rates

Normally, fixed rate bonds offer the best rates within the savings charts, with longer terms usually paying better rates. The drawback with fixed rate bonds, however, is that savers must lock their money into the account for the term of the bond. This means that they are usually unable to make further additions or withdrawals.

The best fixed bond rate is currently available on QIB (UK)’s Raisin UK – 5 Year Fixed Term Deposit. This account pays an expected profit rate of 2.10% AER, but savers must lock their money into the account for a five year period.

Savers wanting to benefit from the higher rates offered on fixed rate bonds, but who do not want to lock their money away for a long period of time, may want to consider a one year fixed bond.

The top one year fixed bond rate available in our chart today is Gatehouse Bank’s 1 Year Fixed Term Woodland Saver. This account pays an expected profit rate of 1.41% AER and requires savers to lock their money into the account for a one year term.

An alternative savings option for those who do not want to lock their money into a fixed term is an easy access savings account. These accounts normally allow savers to deposit further money into the account once it is opened and make instant withdrawals.

In return for the increased flexibility available on easy access savings accounts, these accounts usually offer lower rates than fixed rate bonds. As well as this, savers should be aware that some easy access savings accounts restrict the number of withdrawals that can be made.

Savers considering an easy access savings account will find that the best rate on an account available to new and existing customers is 0.71% AER, which is paid on Investec Bank’s Online Flexi Saver. This account allows further additions and unlimited withdrawals can be made.
An option available to savers looking for an account paying a higher rate than an easy access savings account, but which allow withdrawals, is a notice account.

Notice accounts usually allow savers to make further deposits into the account and withdrawals are normally allowed, but a notice period is needed before money can be withdrawn.

For example, both Oxbury Bank’s Personal 120 Day Notice Account – Issue 3 and Secure Trust Bank’s 120 Day Notice Account pay the top notice account rate of 1.10% AER. These accounts both allow further additions and withdrawals can be made on 120 days’ notice. Savers should be aware that the account from Secure Trust Bank has restrictions on the number of withdrawals that can be made.

Savers with a small amount of savings, or who are happy to split their savings, could consider a high interest current account.

A high interest current account is a bank account that pays interest on the money within the account. The best paying high interest current accounts are Virgin Money’s M Plus Account and Club M Account and Nationwide’s FlexDirect – Funded accounts.

Virgin Money’s M Plus Account and Club M Account pay 2.02% AER on balances of up to £1,000. To open these accounts, customers must open a linked Virgin Money savings account, and Club M Account charges a monthly fee of £14.50. A saver who had the maximum of a £1,000 balance in one of these accounts would earn £20.20 in interest per year.

FlexDirect – Funded account from Nationwide Building Society pays 2.00% AER on balances of up to £1,500 and a minimum of £1,000 must be deposited into the account each month. Although this account pays a lower rate than the accounts from Virgin Money, due to the higher maximum balance allowance, a saver who had the maximum deposit in this account would earn £30 in interest per year.

Disclaimer

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. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. Moneyfacts.co.uk will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

Cookies

Moneyfacts.co.uk will, like most other websites, place cookies onto your device. This includes tracking cookies.

I accept. Read our Cookie Policy