Best buy easy-access savings rates inch higher but we’re still a ‘long way off’ accounts paying more than 1%
- Coventry has upped its easy-access rate to 0.65%
- Savers are limited to four withdrawals each year
- Average paid on easy-access accounts has fallen to an all-time low of 0.09%
Britain’s second largest building society has placed itself at the top of the independent This is Money best buy easy-access savings table with a deal paying 0.65 per cent.
Coventry Building Society’s Four Access Saver can be opened with as little as £1 and will enable savers to deposit up to £250,000 in the account.
Last week, Marcus Bank also boosted the rate on its instant access account to 0.6 per cent in a sign of at least some competition for savers.
Other easy access providers have already also upped rates in response to Coventry, including Saga, Marcus Bank and Charter Savings Bank
The average rate paid on easy-access accounts has fallen to an all-time low of 0.09 per cent, according to Bank of England figures with some major banks paying as little 0.01 per cent to customers.
Someone with £10,000 in an average easy-access account could expect to earn £9 after one year, whereas with Coventry’s new deal one could expect to see a return of £65.
But like a number of other easy access deals, Coventry’s new account does come with limitations – most notably it restricts savers to only four free withdrawals each year.
From the fifth withdrawal onwards, savers will receive a charge equal to 50 days’ interest based on the amount they are withdrawing, so it may not suit those who need to regularly dip into their savings.
What has this meant for the savings market?
Other easy access providers have also recently upped rates, including Saga, Marcus Bank and Charter Savings Bank which all recently boosted their easy-access rates to 0.6 per cent.
The expectation is that other providers will likely follow suit over the coming weeks meaning we could see further rate rises.
James Blower, founder of the Savings Guru said: ‘The fact that Marcus, Saga and Charter have all followed the move by upping rates means that 0.6 per cent has become the new floor and I think we may see some other providers moving above 0.6 per cent this month to respond to these moves.
‘The fact that Coventry is the second largest building society in the UK means it can sustain a good period of time at that rate.
‘Marcus and Charter are both sizeable players too so them all increasing is good news for savers and will help nudge rates higher in the coming weeks.
However, Blower warned we are still a ‘long way off’ from seeing a return to easy access deals paying in excess of 1 per cent.
He said: ‘I’d certainly recommend to savers to switch now to anything paying 0.65 per cent or above, rather than hold off waiting for 1 per cent rates as they are likely to be waiting some time.’
Easy-access rates remain in the doldrums and no rates currently on offer from a mainstream savings provider with Financial Services Compensation Scheme protection can currently come anywhere close to inflation, which was recorded as 3.2 per cent for August.
Savers may be more tempted by a ‘halfway house’ notice account, which have seen more substantial rises in recent weeks – the top deal now pays 1.1 per cent.