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Savers finally feel benefit of rising rates as new best-buy account launches

·2-min read
Bank of England Interest Rate Savings Account
Bank of England Interest Rate Savings Account

Savers can finally enjoy some of the benefits of rising interest rates following the launch of a new best-buy account.

Zopa Bank has this morning raised the rate on its easy-access savings account to 1.81pc, ahead of the previous market-leading Shawbrook Bank account, which pays 1.75pc.

Banks have been widely criticised for failing to pass on the Bank of England’s six consecutive Bank Rate rises since December onto savers, despite the fact that they have been quick to increase mortgage rates.

The Bank last week brought in the largest interest rate rise for 27 years, bringing the Bank Rate up from 1.25pc to 1.75pc. Andrew Bailey, Governor of the Bank of England, said policymakers were monitoring whether banks were failing to pass on higher rates to hard-pressed customers.

The average easy-access savings rate is roughly a third of the Bank Rate, at just 0.69pc, according to Moneyfacts, an analyst.

The new Zopa rate just exceeds the Bank Rate, and means a saver with £10,000 on deposit will earn about £182 in interest over the course of a year.

Since last week’s Bank Rate decision, 24 banks, including Virgin Money, West Brom Building Society, and Leeds Building Society, have raised rates on either fixed-rate or easy access savings accounts, according to Moneyfacts.

However, all rates are still far below inflation, which is currently 9.4pc and is due to hit 13pc, meaning savers are still effectively losing cash every day.

Zopa has also launched several other inflation-beating accounts. Savers can get a higher rate of 2.05pc with Zopa’s 95-day notice account – currently the second best rate on the market for this type of account. This requires customers to give the bank notice long before they withdraw funds.

Zopa’s seven-day notice account pays 1.85pc while its 31-day notice account offers 1.95pc.