5% rates still available in easy access savings accounts – here’s what to look out for
Every Thursday Savings Champion founder Anna Bowes gives an insight into the savings market and how to make the most of your money…
With more than £253bn sitting in accounts earning nothing, savers are missing out on billions of pounds in interest. Although we are expecting to see a base rate cut in the next few weeks or months, as this keeps getting pushed back it’s good to see that some of the best easy access accounts that you can open are still paying more than 5% AER (the Annual Equivalent Rate).
Some existing savers may have seen the rate on their accounts dropping however, as some providers have already started to cut rates in anticipation of a lower base rate this year. So, if you are one of these savers, it could pay to switch if you feel you are getting a rough deal.
That said, as easy access accounts are variable rate accounts, the rate of any could be cut at any time – so keep a close eye on what’s happening.
Another thing to watch out for is bonus rates, which some of the top paying accounts include in the rate they are advertising. The most common type of bonus is one that will apply for the first 12 months of the account being opened, so you need to make sure you move your money at that stage, if the rate without the bonus is uncompetitive.
But sometimes the bonus applies until a specific date, which could be less than 12 months. For example, Chase Bank’s Chase Saver is paying a headline rate of 5.10% but this includes a bonus of 1% which will be removed on 16 January 2025. Therefore, the rate that you will earn over 12 months (the AER) is lower than the headline rate. As of 16 June 2024, the AER on this account was nearer 4.68% – although as long as you make a note to review and move your cash when the bonus is removed, you can still earn 5.10% in the meantime.
Of course, as mentioned above, as with all variable rate accounts the interest rate you are earning can be cut at any time anyway, so you need to keep your eyes peeled.
It’s important to read all the terms and conditions when opening a savings account so that you earn the interest you are expecting.
Source: Money blog: ‘New normal’ warning from UK’s biggest lender in major blow for mortgages
