The number of consumers looking to put money away into an easy access savings account could increase as the average household spending falls, but as rates fall month-on-month, savers should act quickly or they could miss out on the best deals.
In fact, although the UK economy has been hit by the social distancing measures introduced by the Government in March, research by the Centre of Economic and Business Research (Cebr) has found that the average monthly household spending has fallen by 30% and stands at £795 lower than pre-lockdown.
For consumers who have been able to continue earning their full income, this could mean that they have extra funds to deposit into a savings account. An easy access account is often a popular choice during times of economic uncertainty as, unliked fixed rate bonds and notice accounts, they enable savers quick access to their funds, but savers looking to open an easy access account should act quickly as our research has found that month-on-month the average rate of the top 10 deals has fallen from 1.23% to 1.15%.
Top 10 easy access rates
|Virgin Money - Double Take E-Saver (Issue 14) - 1.31%||RCI Bank UK - Freedom Savings Account - 1.20%|
|Marcus by Goldman Sachs® - Online Savings Account - 1.29%||Marcus by Goldman Sachs® - Online Savings Account - 1.19%|
|Saga - Easy Access Savings Account - 1.29%||Saga - Easy Access Savings Account - 1.19%|
|Aldermore - Easy Access (Issue 11) - 1.25%||Investec Bank plc - E-asy Access Account - 1.19%|
|Paragon Bank - Easy Access (Issue 8) - 1.21%||National Savings and Investments - Income Bonds - 1.15%|
|Kent Reliance - Easy Access (Issue 36) - 1.20%||Buckinghamshire Building Society - Single Access Saver (Issue 2) - 1.15%|
|RCI Bank UK - Freedom Savings Account - 1.20%||Shawbrook Bank - Easy Access (Issue 20) - 1.15%|
|Coventry Building Society - Easy Access (Online) (3) - 1.20%||Family Building Society - Market Tracker Saver (1) - 1.13%|
|Investec Bank plc - E-asy Access Account - 1.19%||Ford Money - Flexible Saver - 1.07%|
|National Savings and Investments - Income Bonds - 1.15%||Family Building Society - Online Saver (2) - 1.06%|
Top deals at £10,000 gross. Correct as at 5.5.20
Not only are rates already falling, but if the top deals attract a high amount of savings from consumers, it could lead to providers cutting or withdrawing rates to cope with demand or as they reach their funding requirements.
Commenting on the research, Rachel Springall, finance expert at Moneyfacts.co.uk, said: The Coronavirus pandemic will impact every consumer differently, but for those who are on lockdown and are subsequently not spending their cash on commuting or on other goods, this gives them an opportunity to save the extra disposable income once their monthly essentials have been covered.
“Those looking to put this cash away for a rainy day or indeed to cover them for any emergencies would be wise to consider an easy access account in this instance. During times of uncertainty, easy access accounts provide peace of mind, as savers can get access to their cash quickly, subject to the account’s terms and conditions of course. Therefore, even if savers want to save regularly, easy access accounts may be a better choice than tying cash up in a fixed rate bond or for savers to meet the terms of a regular savings account.
“It remains the case that the interest rates on offer from challenger banks sit towards the top of the tree and are more competitive than those on offer from a high street bank. Even if seen as unfamiliar, challenger banks are safe and have the same protection as the biggest bank brands. Indeed, so long as they are covered by the Financial Services Compensation Scheme (FSCS) – which protects an individual’s deposit up to a value of £85,000 per banking licence – there is little reason for them to be ignored.
“The easy access market has changed month-on-month and while there have been cuts to some deals, there have also been new deals launched by challenger banks into the top 10, such as with Shawbrook Bank and Ford Money paying 1.15% and 1.07% respectively. Those rates are significantly better than those available on some high street bank savings accounts, such as NatWest which pays 0.01%.
“Savings providers may start to see more money coming their way due to the rise in household savings, so the top deals could be tweaked in response. In fact, according to Cebr, they expect the amount of household disposable income that’s saved to rise over 20%, this would be a phenomenal rise compared to last year. In fact, according to the Office for National Statistics (ONS), they measured the average share of household disposable income that is saved to be around just 6%.
“Whatever savers decide to do with their extra cash it’s important that they don’t wait around for too long to take advantage of the top rates on easy access accounts. Even if they open them with a small amount to start with, they can boost the pot again when it suits, but it’s essential to check the terms and conditions of using an account, such as any restrictions on making withdrawals, before they apply.”
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