More options than ever for savers to beat inflation – and unexpected good news about the market’s top easy access ISA
For this week’s guide, Anna Bowes, savings expert from The Private Office, reviews the best account options on the market this month, with plenty of good news around for savers.
Easy access
There has not been a lot of change to the easy access table, apart from the addition of a new financial app provider, Snoop.
Like other fintech providers such as Chip, Moneybox, Tembo, Plum, and Sidekick, Snoop offers savings and investment services.
These companies are not banks themselves, but they partner with fully authorised and regulated banks.
This means that funds placed in their savings accounts are protected by the Financial Services Compensation Scheme (FSCS).
However, it’s important to remember that the FSCS protection limit of £85,000 applies per person, per bank. So if you already hold money with one of these underlying partner banks – either directly or through another financial app – you’ll need to consider your total balance across all accounts.
If you exceed the £85,000 limit, any amount over that may not be protected.
Of the top five accounts listed in the table, Chase and Atom are also app-only, but unlike the fintechs above, these are authorised and regulated banks in their own right.
For those who would prefer not to use an app-only provider, Cahoot’s Simple Saver offers a straightforward, unrestricted, easy access account with an interest rate of 4.55% AER.
However, note that after 12 months, any remaining funds in this account will be transferred to a Cahoot Savings Account, which currently pays only 1.20% AER.
Fixed-term bonds
The Bank of England’s decision to keep the base rate on hold at 4.25% last week has given savers another reprieve – and the good news is that fixed-term bond rates have not only remained steady, but we’ve actually seen some improvements.
Of the top five one-year fixed-term bonds, four are new and improved since the base rate decision last Thursday – and the top rate on offer has jumped up to 4.55% AER, from 4.50% a week before.
It’s not quite as impressive in the two-year table, but the top rate has edged up from 4.42% to 4.45% AER.
However, we have also seen one provider cutting the rate it is offering very slightly, leaving the new rate high enough to keep it in the best buy tables.
The longer-term tables have seen very little activity, which makes sense – although there was no base rate cut this time around, the trajectory is very much downwards, so providers don’t want to be paying out more than they need to over the longer term.
While the new, better rates are only marginally higher, it does mean that savers have more options than ever to choose from that still beat inflation – especially if we see inflation fall in the next few months and years.
Fixed-term cash ISAs
It’s a similar picture for fixed-term ISAs – in fact, in some cases, it’s even better.
We’ve seen some rate hikes among the top longer-term accounts. And, just like with the one-year bonds, there have been multiple improvements. All of the top five fixed-term cash ISAs are now paying more than they were a week ago.
The average has improved from 4.26% to 4.30% following a little battle between Cynergy, Castle Trust and Hodge.
Cynergy is currently the winner, paying 4.35% tax free/AER.
If you are looking to fix for two years, the top rates are still slightly lower, as the markets are expecting rates to fall in the next few months and years, but there have been a few increases in the meantime.
The top rate available over this term is now 4.25% with both Cynergy Bank and United Trust Bank, with Vanquis falling slightly behind them, paying 4.22%.
Over in the three-year table, the top rates are all exactly the same as in the two-year table, so if you want to hedge against further cuts by locking in for a bit longer, you’re not missing out by doing so.
Finally, in the five-year table, the average among the top five is 4.22%, which is the same as both the three-year and two-year terms, as the rates are very similar.
However, the top five-year rate is very slightly less at 4.23% with the Nottingham Building Society.
What term you choose all depends on what you think will happen to interest rates over the next few years.
In the meantime, once again, there are plenty of inflation-beating accounts to choose from for those who have not yet used this year’s ISA allowance or who are looking to switch from a poorer-paying ISA account.
Easy access cash ISAs
Competition has been more muted among the easy access cash ISA providers and we have seen a few rates being cut over the last few days.
That said, the top easy access ISA with Plum increased the rate for new customers from 4.85% to 4.88% – an unexpected move as it was already paying quite a bit more than the rest of the field.
For those who do not want to choose a financial-app-only fintech provider, the top rate is now a little less, as Vida Savings has reduced rates.
The new best Easy Access ISA is with Kent Reliance, paying 4.46%.
This is a refreshingly straightforward account, as there are no restrictions on the number of withdrawals you can make, and there is no short-term bonus to watch out for.
It can be opened online or even in branch if you live close to one.
As ever, check all the terms and conditions to make sure you choose the best account to meet your needs.
