Share
Fixed rate bonds have often been popular with savers as they not only offer a fixed rate for the duration of their term, but also usually offer the best savings rates overall.
Indeed, today the top saving rate is available on a five year fixed rate bond, but with saving rates across the charts at record lows, many savers are reluctant to lock into a long-term bond due to future uncertainty and concerns that a rise in inflation will erode their savings.
This concern is not unfounded, as the top rate being offered in the fixed bond chart is below the Bank of England’s target inflation rate of 2%. Gatehouse Bank currently pays an expected profit rate of 1.50% AER on its five-year account, which if a saver locked into and the Bank of England meets its target rate of inflation, would result in the saver’s deposit being eroded by inflation.
Loans
This week sees M&S Bank amend the rates on selected tiers of its Personal Loan. This update sees the rate for borrowing amounts below £5,000 increased by up to 3.0% APR, a small uplift of 0.1% APR for shorter-term borrowing of amounts between £15,001 and £20,000, but a decrease of 0.5% applied to borrowing between £5,000 and £7,499, which is now priced at 3.9% APR. Despite the increase in overall cost of lending, those looking to raise £7,500 to £15,000 will find this loan still offers some of the most competitive rates available at 2.9% APR. There is also an option to defer repayments at the start of the loan, which may be appealing to some borrowers. Overall, this loan earns an Excellent Moneyfacts product rating.
As with the top easy access saving accounts, the top paying notice accounts all have some type of opening restriction. Again, savers looking for an account without any opening restrictions should visit our notice account chart where they will be able to find lower-paying accounts that are available to all without restrictions.
ICICI Bank UK had the top notice account rate this week with its Notice Savings Account paying 0.85% gross monthly on a £1 opening minimum deposit and is available to new and existing HomeVantage Current Account customers. Further additions are allowed. Withdrawals can be made subject to 95 days’ notice. All transactions must be made via a linked HomeVantage Current Account. This account can be opened and managed online, in branch and by phone. Customers should be aware that the rate will reduce to 0.55% on 15 March 2021.
The top fixed bond rate this week continued to be offered by Shawbrook Bank, which pays 1.35% gross on anniversary on its 7 Year Fixed Rate Bond Issue 6. This account requires a £1,000 minimum deposit to open and must be opened online. Once opened, it can be managed online and by phone. There is a version of this account that pays interest monthly at a slightly lower gross rate of 1.34%.
Four providers offered the top-paying five year fixed bond rate this week. Shawbrook Bank pays 1.25% gross on anniversary on its 5 Year Fixed Rate Bond Issue 33. A £1,000 minimum deposit is needed to open this account. It must be opened online, but can then be managed online and by phone. There is a version of this account that pays interest monthly at a slightly lower gross rate of 1.24%. UBL UK pays a gross rate of 1.28% on maturity on its 5 Year Fixed Term Deposit, but also offers versions of this account that pays 1.25% gross on anniversary and 1.24% gross monthly. All versions require a �
HomeNewsSavings Is it worth switching your savings account to a higher rate in 2021? Published: 06/01/2021 Share
2020 ended with savings rates at historic lows but will 2021 bring better rates for savers and is it worth switching your savings account?
Data from the Bank of England shows there is £215 billion held in savings accounts paying zero rates of interest. During 2020 many people became accidental savers due to lockdowns and regional restrictions that limited their spending. As a result, there was £150 billion saved into cash savings accounts during last year. By October 2020 savings balances had reached £111 billion compared to £45 billion in October 2019.
While savings rates at the start of 2021 remain depressed compared to previous years, those earning no interest or low interest on their savings could instead be earning up to 1.00% on a one-year fixed rate bond or 0.75% with an easy access account.