Savings warning as increased interest rates may mean savers ‘fail’ to get best deals

Martin Lewis lays out the best savings deals available

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Ford Money has increased interest rates by 0.1 percent on two of their accounts as markets begin to increase their competitiveness. With the potential for even more deals to be announced soon, there are certain places offering the top offers for Britons to secure.

The past two years have been turbulent for savers but 2021 ended on an unexpectedly good note with the Bank of England’s decision to raise the base rate. 

Banks and building societies were quick to add this increase on their debt and borrowing products but now savers are starting to see the impact.

The base rate was increased in December 2021 from a record low of 0.1 percent that was instilled at the very start of the COVID-19 pandemic. 

Now, the Bank of England base rate sits at 0.25 percent, slowly growing back to pre-pandemic levels.

On Wednesday, Ford Money announced the increase on its Flexible Saver and Flexible Cash ISA products. 

Both products will be increasing to 0.60 percent, a rise of 0.10 percent which will apply to both existing and new customers.

A Ford Money spokesperson commented: “We hope that by increasing the rates on our Flexible Saver and Flexible Cash ISA products, we are providing savers with a better rate for their money, as we all continue to tackle the challenges brought on by the pandemic. 

“All changes at Ford Money are made to ensure we’re offering customers the most appropriate and competitive accounts possible at any given time in the market.”   

This appears to be a marketwide reaction as in just the first few days of 2022 savers have noted a quick uptake in increased interest rates. 

During the last 12 months, many were stretched to find savings accounts offering more than 0.5 percent.

Additionally, those that offered any interest rates similar to inflation often had a list of conditions and requirements that had to be met in order to receive it. 

This includes Cambridge Building Society whose incredibly attractive five percent offering is only available to existing customers who have been with them for the past three years.

The marketwide increase to a rough 0.60 to 0.70 percent average offerings seems like the light at the end of the tunnel but co-founder of savings platform Raisin UK, Kevin Mountford, suggested a different outlook. 

He shared that the growing deals may still be keeping savers just short of the full 0.15 base point rise: “It still seems that some of the banks have been slow to pass on the full 15bps and as such savers are failing to maximise their returns.”

Mr Mountford shared his market insights with Express.co.uk, saying that easy access accounts are being led by Cynergy Bank offering 0.7 percent interest rate. 

These types of accounts usually have the lowest interest rates in the general market due to their instant access aspect. 

Mr Mountford suggested that those looking for a higher interest rate should consider Notice Account options: “These are also variable rate accounts you can get 0.80 percent from Investec, via Raisin, which requires only 32 days notice so it is a great way to develop a more disciplined approach to saving.” 

Additionally, fixed accounts generally offer the best savings account interest rates on the market and competition in this sector has only grown since the base rate rise. 

Mr Mountford noted: “As expected, the longer the term the higher the rate, with two percent available from QIB UK on its five year product. This said, it generally seems like people are opting for short to medium products and QIB UK is also leading the way with 1.85 percent for three years.”

He concluded: “In summary this shows that most savers can secure more interest on their hard earned cash and whilst the leading offers maybe from lesser known banks, your money is protected up to £85,000 via the FSCS so savers need to shop around.”

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