Savings rates have doubled! Zopa tops best buy tables paying 1.81 percent so act fast
Martin Lewis compares premium bonds to savings rates
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Savers have suffered years of misery but cash has perked up this year, even though the Bank of England has held base rates at 0.1 percent. The big high street banks may offer dismal rates on deposit but niche “challenger banks” are paying much more.
Savings expert Andrew Hagger of MoneyComms.co.uk is urging savers to scan the market to see if they can get a better deal.
He said market-leading savings rates tend to be swamped by desperate savers and are often not available for long, so take advantage while you can.
Savers must look beyond the big banks to get a decent return. “Less familiar names such as Zopa, Investec, United Trust Bank, Hampshire Trust Bank and Shawbrook Bank and others are all competing for your money.”
Hagger named his personal best buy savings account as the one-year fixed-rate bond from Zopa paying 1.40 percent. “This is an absolute belter and will prove hugely popular.”
Zopa’s fixed rate bond thrashes best buy rates available at the start of 2021, Hagger added. “The best one-year rate was just 0.70 percent in January. Today’s best deals are now paying double that.”
Zopa offers a full range of fixed-rate bonds. It pays 1.67 percent over two years, rising to 1.76 percent over three years and 1.78 percent over four years.
It reserves its best rate for savers who are willing to lock their money away for up to five years, rewarding them with 1.81 percent.
While these rates may be low by historical standards, Zopa’s offerings are dominating the best buy tables today.
SmartSave Bank also features in the best buy tables, with its one-year bond marginally ahead of Zopa paying 1.41 percent.
For savers who want easy access to their money, Hagger said there are two great accounts available today.
Cynergy Bank Online Easy Access pays 0.60 percent, while the Investec Bank Online Flexi Saver is close behind at 0.58 percent.
“Both are clean straightforward accounts with no initial bonus, no restrictions or hidden catches,” Hagger said.
Coventry Building Society regularly features in the savings rate best buy tables and its online-only Limited Access Saver account pays 0.55 percent.
However with this account, you can only make a maximum of six easy access withdrawals per year, and will lose 50 days of interest if you withdraw more.
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Anna Bowes, founder of rate tracking service SavingsChampion, said with consumer price inflation at 2 percent in July no savings account will maintain the value of your money in real terms.
“However, if you don’t need access to your cash you can narrow the gap by taking out a market-leading fixed rate bond.”
Bowes urged savers to shift their money out of accounts paying zero interest, as Bank of England figures show that 90 percent of the money sitting in cash earns 0.1 percent or less. “This means almost £1.2 trillion is earning peanuts.”
Of this, £240 billion earns no interest at all, up a third since the pandemic.
People are pouring money into savings accounts and getting nothing in return, Bowes said. “Better rates are out there. Go and get them.”
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