Savings rates pay big: now FIVE easy-access accounts pay 4% or more as challenger banks battle for the top spot
- Principality BS and Sainsbury’s Bank now pay 4.01% on easy access accounts
- App-based Chip, Coventry BS and GB Bank all pay 4%
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Savers can now choose from five easy-to-access accounts that pay 4 percent or more.
Today, four more providers have started paying 4 per cent on their bread and butter bills, joining Coventry Building Society, which launched its 4 per cent deal last week.
Pack a punch: Market commentators are viewing today’s rate hikes as preemptive steps ahead of Thursday’s base rate decision.
Someone who deposits £10,000 into either account can earn £401 in interest over the course of a year. Yes, if the rates remain the same.
However, there are limitations with both the best buy deals.
Savers can only withdraw money from the Principality’s account twice per calendar year. While it can be closed at any time, closing also counts as a withdrawal.
Meanwhile, Sainsbury’s Bank’s deal limits depositors to three withdrawals a year. More than that and their rate is reduced to 1 percent.
It’s also worth pointing out that the first £1,000 in the Sainbury’s account will add up to just 1.15 per cent. It is the balance between £1,000 and £500,000 that earns the 4.01 rate.
The savings and investment app, chip, offers 4 percent – without any restrictions on withdrawals. Though savers have to open and manage the account through the mobile app.
It is protected by the Financial Services Compensation Scheme, meaning savings deposits are protected up to £85,000 per person.
GB Bank also offers a rate of 4 percent through the savings platform, Raisin UK*.
Raisin is a savings marketplace that offers access to multiple savings products and banks, but instead of having to open an account with each provider separately, savers only have to register once.
How high can the rates go?
Savings rates have risen rapidly in recent weeks, with banks battling for first place and attracting customers.
The Monetary Policy Committee (MPC) meets this Thursday and many expect to raise the base rate from 4.5 percent to 4.75 percent or 5 percent.
Market commentators view today’s rate hikes as preemptive measures ahead of Thursday’s base rate decision.
James Blower, founder of the Savings Guru website, says: ‘These increases show that these providers expect an increase of at least 4.75 percent.
“We will certainly see further movements late this week and early next week if there is an increase.
“There’s been fewer steps ahead of the meeting this time around because there’s more uncertainty about where rates go, so providers are waiting this time.”
Andrew Hagger, personal finance expert at MoneyComms, agrees. He says, “Some providers steal a march on their competitors and get their raises in early to gain valuable best-buy exposure.”
Markets now expect the Bank of England to raise key rates to 5.75 percent later this year. Some traders are even betting it will be 6 percent.
Hagger adds: “If the base rate reaches 5.75 percent or 6 percent, as many predict, we may even see an easily accessible savings rate of 5 percent.”