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Martin Lewis: Top up your savings accounts before rates drop

21 September 2023

With the Bank of England pausing base rate hikes, savers have to be quick to not miss the best deals.

By Matteo Anelli,

Reporter, Trustnet

Savers have been urged to get in now on high-interest accounts before the best rates are gone, by Martin Lewis of MoneySavingExpert.

The savings market could cool down very quickly following the Bank of England’s vote to maintain interest rates at 5.25% this afternoon.

“It's possible fixed rate savings may shave down their rates at speed (as they're based on longer term predictions of interest rates). If so, and you were looking to lock in one, you'll want to open it this minute as the rates could drop even by later today, certainly if it does happen by later this week,” he tweeted.

Alternatively, for savers who aren’t sure what the rates will be, he suggested a tactical play.

“Open a fixed account today but don’t fund it immediately (usually you have seven to 14 days to do that), so that the account remains available to you while the market adjusts. If rates go up at a later point, just don't fund the facility opened”.

Cash is not just for the risk-averse, however, as investors could also look to the asset class as a diversifier, according to Kelly Prior, investment manager in the multi-manager team at Columbia Threadneedle Investments.

“Cash is a credible asset class for the first time in years. In the short term it offers a complement to other assets in what are likely to be volatile markets,” she said.

“Not only does it now pay good risk-free returns, but it also provides you optionality in the current difficult economic environment.”

So whether you’re a saver or an investor, below are the best savings rates available right now as listed by Moneyfactscompare.

Starting with fixed term, the best rate is National Savings & Investments, with its one-year Guaranteed Growth Bond paying out 6.2%. An equivalent account at the Union Bank of India will get 6.11% to savers who are happy to use the mail or go to a branch to open it.

In third position is Ahli United Bank’s one-year account, which can be opened through the Raisin platform and pays 6.1% on maturity.

Locking cash for longer won’t get you better rates, but for those wanting to secure a steady return for longer, Ford Money offers 6.05% over two years. Over five, the best deal is 5.85% with Tandem Bank, whose accounts can also be opened with Raisin.

If locking money away for that long isn’t for you, the same rate of 5.85% is matched by accounts that mature in less than a year, including Secure Trust Bank for its nine-month fixed rate account.

If you prefer the flexibility of withdrawing your money when needed, easy-access accounts still offer rates north of 5%.

Leeds Building Society pays 5.1% on maturity, Paragon Bank 5.05% on its Double Access Savings Account (paid on the anniversary date), while Secure Trust Bank offers 5.03% monthly. All these accounts can be opened online.

Regular accounts do offer higher rates, but severely limit the amount of cash you can save with them.

With its Flex Regular Saver (Issue 2), Nationwide Building Society pays 8% on a maximum monthly deposit of £200. With first direct, it’s 7% on £300 a month.

Finally, for savers who want to be tax-efficient with an ISA savings account, the best option is to go with Virgin Money’s one-year fixed-rate cash ISA exclusive (issue 6), which pays 5.85%.

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