Inflation rates took another jump forward to 9.4 percent as of June, its fifth jump of the year so far as costs of goods and energy continue to spiral. To combat the rapid rise, the Bank of England has been raising its base interest rates to both make borrowing more expensive and encourage people to save. This base interest rate rise has a knock-on effect on different savings accounts, but some accounts offer better rates than others.
Savers generally benefit from Bank of England interest rate increases, as it often means savings account interest rates see a rise, too.
Alice Haine, a personal finance analyst at Bestinvest previously said: “For cash savers, an interest rate rise is always a good thing, as they can secure higher rates on their savings pots – that is of course if they have spare cash to save in the first place.”
For borrowers, an interest rate reflects how much the cost of borrowing is but for savers, it tells you how high the rewards are for saving.
Borrowers will pay the additional interest rate percentage of what they’re borrowing on top of the initial sum.
Whereas for savers, the interest rate reflects how much will be paid into their account, as a percentage of the savings in there.
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The higher the savings rate, the more will be paid into your account for a given-sized deposit.
Ms Haines said: “Saving rates have been creeping up to the highest levels seen in a decade, with some accounts now offering up to 1.56 percent for easy access accounts and up to three percent for fixed.”
Even a tiny change in interest rates can have a big impact, so it’s key to keep your eye on the market for fluctuations.
There are a variety of different savings accounts to choose from: ISAs, fixed rates, and easy access, to name a few.
Easy access savings accounts are one of the simplest of all, and they enable savers to make additions and withdraw funds with minimal restrictions.
Some even come with bonus interest payments if certain conditions are met.
Yorkshire Building Society’s Internet Saver Plus ranks fifth with an AER of 1.55 percent.
The minimum deposit to open this account is also £1 and when you hit certain milestones savings, interest increases. For example, at £50,000 rates jump to 1.6 percent.
Al Rayan Bank’s Everyday Saver fourth ranks with an AER of 1.6 percent.
A £5,000 deposit is required to open this account and Expected Profit Paid is monthly.
Virgin Money Currently offers the top three easy-access savings accounts according to Money Facts, with the Virgin Money M Saver at 1.17 percent, the Virgin Money M Plus Saver also at 1.71 percent, and the Virgin Money Club M Saver coming out on top, but also with an AER of 1.71 percent.
Interest is paid quarterly with the Virgin Money Club M Saver and there is no minimum deposit required to open it.
For more information on each account, visit Money Facts’ website, here.