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Savings rates hit nine-year high, but you are still being shortchanged

·2-min read
Saving interest rate bank rate Isas
Saving interest rate bank rate Isas

Savings rates have risen to a nine-year high, with the average easy access account now offering returns of 0.70pc.

Rates have more than trebled in the last year following six consecutive interest rate rises, according to Moneyfacts, an analyst.

Although returns have gone up considerably from 0.18pc a year ago, they still lag behind the Bank Rate, which stands at 1.75pc.

Notice accounts, which require savers to give at least 30 days notice if they want to withdraw money, are offering an average of 1.18pc in interest – the highest level since 2012.

Savers buying one-year fixed bonds can expect to get 1.97pc back in interest, up from 0.6pc a year ago.

Consumers now have more accounts to choose from than they had in the past two years. There are 1,742 savings deals on the market, compared with last April’s record low of 1,340.

Rachel Springall, of Moneyfacts, said the increased savings rates were welcome news for savers.

“While a rise in cash rates is positive, there remains an obvious difference between the average fixed bond and fixed Isa rates, but it has narrowed this month,” she said.

Longer-term fixed bond rates have increased from 2.21pc to 2.42pc, while rates for longer-term fixed Isas have been bumped up from 1.90pc to 2.15pc.

Last month the figures were 2.21pc for longer-term fixed rate bonds and 1.90pc for longer-term fixed rate Isas.

Ms Springall said banks and building societies could increase Isa rates further to entice customers. She said savers could increasingly opt for a notice account instead of a fixed or easy access account to benefit from the high rate, but also have some flexibility in terms of being able to take their money out.

“Whichever type of account savers decide to use, it’s imperative they consider any flexibility they may need in the months to come and keep a close eye on the top rate tables as rate rises dominate,” she said.

Savers are increasingly moving their money into fixed accounts as opposed to easy access accounts, she said.

The amount of money going into easy access accounts, excluding Isas, fell last month to its lowest level this year, according to the Bank of England.