Big Banks Finally Raise Savings Interest Rates, But was it worth the wait?

By: MoneyFacts

As we enter the festive month of December, savers will finally see some positive change in the variable savings market as many of the biggest brands have decided to increase their savings rates, but has the wait been worth it?

While many may assume it’s worth celebrating, the latest research from moneyfacts.co.uk can reveal that not all savers will be delighted, as some of the more popular deals have not had the full 0.25% Bank of England rate rise passed on. In fact, the average easy access rate has risen by a pitiful 0.07% in the last month, from 0.39% to 0.46%, and even those banks that do offer the full 0.25% rise can still be easily beaten by alternative brands, as challenger banks continue to dominate the Best Buys.

Rachel Springall, Finance Expert at moneyfacts.co.uk, said:

“It’s now been a month since the Bank of England increased base rate by 0.25% and savers have had to wait with bated breath to find out if they will benefit. Unfortunately, while plenty of rate rises have now been announced, some savers will find that they haven’t benefitted from the full 0.25%. Savings providers appear to have been very selective about which accounts get the full rise.

“Savers who find that their high street easy access account is still paying very little may want to take a look at the Best Buys. Since the start of November, there has been some decent competition among the challenger banks looking to entice new savers. While the big banks dragged their heels on savings rate increases, challengers have taken the opportunity to shine.

“Just last week BM Savings increased the rate on its easy access saver to 1.45%, which is the highest return in this market since August 2016. Virgin Money also jumped on the rate rise bandwagon, increasing the rate on its easy access deal to 1.36%, the second-best in the market. If savers don’t take advantage of the current deals fast, however, they could find that they miss out on the best returns available in over a year.

“The best deals don’t tend to stick around for too long. A good example of this is Paragon Bank, whose limited edition easy access account paying 1.31% had a short shelf-life of just over two weeks. Similarly, Bank of Cyprus UK had an easy access saver paying 1.35% which was reduced after just three days.

“Unsurprisingly, the biggest high street banks seem to be missing entirely from the top deals in the easy access market. The convenience of keeping cash in these accounts means that savers may be missing out on vital interest. They would be wise to consider the more unfamiliar brands instead to make their cash work harder.”

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