'Positive' news for savers as interest rates across accounts rise – 'act quickly'

Martin Lewis offers advice on savings and interest rates

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Savings accounts first took a tumble back in March 2020 as a result of the onset of the COVID-19 pandemic. Struggling to recover ever since, savers have been placed in a bind when it comes to finding the best ways to grow their money. However, there are promising signs that the situation is starting to improve for Britons.

Analysis from Moneyfacts has shown the average rates on fixed bonds and fixed ISAs rose month-on-month for the first time since October 2020.

The average easy access rate now stands at 0.17 percent, with the average notice rate now at 0.42 percent. 

The easy access ISA rate increased for the first time since October 2020, and is now the highest seen since March 2021.

Commenting on the matter, Rachel Springall, Finance Expert at Moneyfacts, said: “The average rate rises on fixed bonds and ISAs will be positive news to savers, particularly to those who may rely on their interest as a form of income.

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savings interest rates

‘Positive’ news for savers as interest rates across accounts rise – ‘act quickly’ (Image: Getty)

“Overall, the choice of deals available to savers has improved this month, and while these levels are far from the volumes seen before the pandemic, it is still a refreshing change to the drop in both products and rates to record lows during 2021.

“Apart from the average notice ISA rate, all savings rates rose month-on-month, good news for those looking at either an ISA or non-ISA.

“This comes just one month after all savings rates rose or remained unchanged for the first time since October 2020.”

Ms Springall credited challenger banks as providing the savings market with a well-needed boost.

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With more of these challenges offering products than ever before, the competition to draw in savers is hotting up.

As a result, this may lead to an interest rate bidding war, with savers flocking to the provider with the best options.

However, Ms Springall also took the opportunity to warn savers that a good deal may only be limited.

This comes as the “shelf life” on a fixed rate bond fell to 53 days recently, as providers react to the movements of the market.

savings ISA

Savings: Average ISA rates have improved (Image: EXPRESS)

She continued: “A positive change to see has been a rise to the average easy access rate, encouraging for savers comparing deals but regardless of rate, it seems the popularly of having flexible access to cash remains a vital aspect to savers. 

“Indeed, savers are still storing their cash in sight deposits, with £6billion in deposits made in May – or £56billion so far this year – according to the Bank of England. 

“Considering the pandemic effects on financial vulnerability, savers may even choose a deal with a brand they trust and is completely flexible in the months ahead.”

The savings market, however, has yet to recover from the widespread impacts of the pandemic.

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While stronger rates could make savers feel more optimistic, it is clear they are not totally out of the woods as of yet.

It is not possible to predict how providers will react to the removal of lockdown restrictions and any events in the future.

As rates have fallen in the past, Britons should be prepared for this eventuality.

Ms Springall concluded: “Savers have had a terrible time with rates falling to record lows this year and as things improve, they would be wise to keep a close eye on the top rate tables and act quickly to take advantage.

“Savings providers will need to be ready to react to demand, keep a firm grasp on market trends and service their customers as best they can during these challenging times.”

Harry Byrne

Harry Byrne

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