‘Grab this 4.56pc savings rate now’: Expert says act fast as banks axe best buy accounts | Personal Finance | Finance

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2022 brought sweet relief for savers, who could finally see a much higher return on cash after years of getting next to nothing.

One year ago, the best easy access account was paying just 0.71 percent and the best one-year bond paid 1.36 percent, according to research from Savings Champion.

Today, savers can earn around three times as much, getting up to 2.86 percent on easy access and 4.33 percent from a one-year fixed-term bond.

Yet the trend has gone into reverse even though the Bank of England increased interest rates yet again in December to 3.5 percent.

Savings Champion founder Anna Bowes says banks and building societies anticipate fewer rate hikes in 2023 and are cutting deals as a result. “Unfortunately the slight reduction in best fixed-term bond rates has continued over the last few weeks and across all terms.”

Until recently, FirstSave was topping the best buy tables for one-year bonds paying 4.26 percent, but this has now been withdrawn.

Luckily, savers can still find get almost as good a rate, with Cahoot paying 4.25 percent a year on £500 and above, and Atom also paying 4.25 percent but on a minimum opening balance of just £50.

Savers who are willing to lock their money away for a longer term can get a better deal, though. 

SmartSave’s 2 Year Fixed Rate Saver pays 4.52 percent on minimum opening balances of £10,000, while Loughborough Building Society’s Two Year Fixed Rate Bond pays 4.50 percent.

A brace of two-year fixed rate bonds that were also paying for 4.50 percent have both been axed, by the Union Bank of India and Close Bothers.

Bowes said it is a similar story with three-year bonds, which paid 4.65 percent until recently. “The best rate on offer has now fallen slightly to 4.56 percent, and that’s only thanks to a newly launched bond by Smart Save.” 

Close Brothers Savings follows very closely, paying 4.55 percent, while Hinckley & Rugby’s 30 Month Fixed Rate Bond Issue 3 takes up third place paying 4.50 percent.

Bowes bemoaned the lack of “positive action”, which appears to have put a stop to the good news savers enjoyed in 2022.

“I’d love to bring some better news on five-year fixed rate bonds, but even here the top rate on offer is also down a little. Nottingham Building Society withdrew its bond paying 4.80 percent, leaving Aldermore in the top spot with 4.60 percent.”

As best buy rates are repeatedly pulled Bowes said savers need to act fast if they spot a tempting deal. “The message is, don’t hang around.”

However, savers should only lock into a fixed rate if they do not need the money during the term of the bond, as they cannot access it in that time.

Even though savings rates have risen strongly in the last year, they still pay far less than inflation.

This means the value of people’s money is being eroded in real terms.

READ MORE: Drawdown disaster averted as pensions and Isas bounce back

That has made people desperate to grab the best rate they can, and many deals quickly get oversubscribed.

The scramble for market-leading deals will only intensify if the era of rising rates really is over.

“Fixed-term bond rates definitely seem to be falling a little at the moment, so if you have cash that you are looking to tie up, you might be wise to grab a top rate while you can,” Bowes says.

Easy access accounts are following the same trend, with Zopa holding onto the top spot for weeks by paying 2.86 percent. “There have been hardly any other changes either – and none of them positive,” Bowes said.

She adds: “The only thing of note in January is another withdrawal, with Coventry Building Society pulling its Limited Access Saver (Online) (6) paying 2.85 percent. So in the last three weeks the average of the top five easy access accounts has dropped slightly.”

With inflation still high, savers need to stay on their toes to protect the value of their money with a market-leading deal.

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