Savings rates rose month-on-month between July and August in what was the second consecutive month of growth. Additionally, average notice ISA rates remained unchanged at 0.31 percent but the no notice ISA rate rose for a second consecutive month and is now the highest it has been since February 2021.
On top of this, the number of live savings account options increased to 1,191 in August.
Additionally, the number of ISAs rose to 362.
Rachel Springall, a Finance Expert at Moneyfacts, commented: “The savings market continues to move in a positive direction as rates across most of the savings spectrum improve at a slow and steady pace.
“Savers who may be coming off a one-year fixed bond and wish to lock into a new deal will find notable improvements to the top rate tables over the past few months, and whilst the average return is 0.03 percent less than a year ago – it is still moving in the right direction and further away from the record low recorded in April this year.
“Longer-term fixed bonds also improved this month, but it is unclear whether savers are yet prepared to tie up their money for longer than a year when chasing the top returns.
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“Choice has expanded in the market for a fourth consecutive month which is encouraging for savers and a catalyst for providers to keep on top of the competition and perhaps enhance their deals in response.
“We now have the most savings providers on record, and more brands can mean more competition. After the market endured turmoil due to the pandemic and subsequent base rate cuts, there is more room for improvement, but it is still good to see rates rise instead of fall as only a few months ago average rates throughout sat at record lows.
“Savers yet to utilise their ISA allowance or who are perhaps considering their options if they have an ISA set to mature this autumn will note some improvements to the market as there are now more ISA options than there have been since October 2020 when there were 373 deals.
“However, when comparing average rates, fixed ISAs are still paying below their fixed bond counterparts, so savers must consider their options if they have a Personal Savings Allowance and some savers may even decide to withdraw funds from ISAs entirely. “Indeed, according to the Bank of England, there was an outflow of £699million from cash ISAs during June, bringing the total outflow so far during 2021 to almost £2.8billion. However, easy access accounts remain a firm favourite amongst savers looking for flexibility with their cash.
This advice is likely to be heeded by many as additional research from WEALTH at work found more than half of UK adults (51 percent) said the pandemic has made them more conscious of the need to save more.
Additionally, over a quarter (26 percent) said the pandemic made them realise they do not have enough set aside.
Jonathan Watts-Lay, a Director at WEALTH at work, concluded: “The pandemic forced many people to stop and think about their finances, and the majority realised that they needed to save more. Unfortunately, reduced work or redundancy has meant that many have faced a fall in their overall household income. Without having sufficient savings to fall back on, many may have struggled to make ends meet.
“The research has shown us that people do want to learn how to save more money, and some realise that they need to save more into their pension. Financial education and guidance delivered in the workplace can help people understand how to make the most of the various saving vehicles available depending on their individual saving needs; whether that be to purchase a car, house, for retirement or even to cover unexpected eventualities such as being made redundant.
“It can help people realise how they could free up more money for their savings by shopping around for car insurance suppliers rather than auto-renewing, or by utilising discount vouchers. Financial education can also help with other important financial skills such as how to best manage debt, understanding the importance of having an emergency fund set aside for unplanned life events, as well as having sufficient savings for retirement.
“These uncertain times have highlighted the need for people to become more financially resilient so that they are better able to manage any financial shocks, many will need support on how to go about this. Individuals should speak to their employer to see what support they can offer.”