Savvy savers move quickly to grab the top rates
Analysis by MoneySupermarket of the top five savings rates across easy access, cash ISAs and fixed rate bonds found savers need to be quick off the mark to take advantage of the top paying rates before they are withdrawn; with some of the best deals being removed within a week.
Competition among banks and building societies for savers cash has been hotting up since the turn of the year with the average top five rates on easy access and cash ISAs up 0.17 per cent AER since the same time last year, and fixed rate bonds rates up 0.38 per cent.
The current top easy access saving rate at £1 is Santander's eSaver Issue 4 at 3.1 per cent AER, and this has appeared in the top five best buys since 30th August 2011. Yet savvy savers with their finger on the pulse could also take advantage of leading rates that appear for a short time only. For example, the AA's Internet Extra Issue 5 at 3.2 per cent AER appeared on 20th December, topping leader Santander, but by January this rate was no longer offered.
For cash ISAs, top rates in the number one position have also disappeared quickly. For example, West Bromwich Building Society appeared in the top spot for cash ISA savings on the 16th January with its WebSave ISA 4 offering 3.07 per cent AER, beating the previous leader, the AA's Internet Access ISA Issue 2 at 3.05 per cent AER, before the top rate was pulled a week later.
In addition, some providers are also introducing market leading deals for those with higher deposits. For example, anyone depositing £10,000 in the market leading West Bromwich Building Society Direct Bonus Account Issue 3 would receive a rate of 3.13 per cent, while a deposit of £50,000 would earn a rate of 3.2 per cent on the BM Savings Online Extra Account.
Kevin Mountford, Head of Banking at MoneySupermarket.com, said: "The increase in average easy access, cash ISA and one year fixed rate bond saving rates since 2011 is great news for savers, particularly against a backdrop of a static base rate. Providers use attractive headline rates to lure in customers, and in some cases, these don't hang around for long, so savers should be quick and take advantage while they can. At a time when making returns on savings is tough enough, savers need to take every step to take advantage of the increased rates we are seeing currently. If you have a large deposit to put into savings, you can also take advantage of better deals with a number of products only reserved for those with sizeable savings pots."
The analysis by MoneySupermarket also looked at one year fixed rate bonds that are now due to expire, and calculated the interest that someone could save by switching to find a better deal. For example, someone investing £10,000 in FirstSave's fixed rate bond in January 2011 will have earned £325 interest during the term at a rate of 3.25 per cent AER*. However, on maturity, the rate dropped to 0.25 per cent, and would earn only £25 in interest over the following 12 months.
Kevin Mountford continued: "Banks will send a reminder notice to anyone who has a fixed rate bond which is due to mature, or bonus rates dropping off, advising them of the options available. It is vitally important that savers take action as some providers will automatically enrol them into another bond, tying savings up for the term of the product, or their savings could be left languishing in an account paying a poor rate of interest.
"With signs indicating Base Rate will remain low for the foreseeable future, for savers who can afford to lock their money away for a fixed term of even a year this could be a good option in order to get some extra bang for their buck. It's important to remember that once the introductory offer has ended and the product has served its purpose, it's time to get online, shop around and switch to a more competitive deal. Savers need to be quick, as some of the best products may not be available for long."