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May Savings Round Up

If you keep an eye on best buys, you’d be forgiven for thinking that last month was a quiet month in the market, as headline rates have barely changed in the past few weeks.  The names at the top of the tables remain almost the same too.  Where we have seen changes, these have been minimal – Al Rayan Bank replaced Gatehouse Bank at the top of the 2 Year tables but the reverse happened in 3 Years with Gatehouse brining in a new best buy.  However, this masks a number of changes below the top line rates which will impact savers.

 

Easy Access changes 

Kent Reliance have removed their best buy 1.50% online saver and now have a 1.40% paying easy access account available online, in branch and via post.  Virgin Money and Marcus by Goldman Sachs continue to lead the way paying 1.50% but Marcus has reduced the maximum balance from £250,000 to £100,000.  While this won’t be an issue for many savers, it could indicate that Marcus is receiving a significant number of large deposits which it is now seeking to limit.

Where there was a strong supporting cast tucked in behind Marcus and Virgin, paying rates between 1.40 – 1.50%, these have also diminished with Yorkshire Building Society, Sainsburys and Ford Money all either withdrawing or reducing rates.  This leaves just Shawbrook (1.43%) and RCI Bank (1.42%) filling the gap down to 1.40%.

The market has seen a significant movement of cash with around £30bn moving in to easy access accounts.   This means that providers are seeing higher inflows to best busy forcing them to reduce or remove products to stem the level of savings.

 

One Year Fixed Rates

While Islamic banks, Bank of London & Middle East (2.20%) and Al Rayan Bank (2.17%) continue to lead the 1 Year tables, a number of providers have changed behind them during the month.  We did see a short period where no non-Islamic banks were paying 2% or more.  This has been remedied with Atom Bank launching a 2.03% product and Metro Bank increasing its rate to 2%.  

Atom has a very low minimum balance of just £50 but it can only be applied for via the Bank’s mobile app, which can be downloaded on to your phone.  This may limit appeal for some savers.

We don’t expect either rate to be sustained for long so do move quickly if either appeal.

 

National Savings & Investments changes Index Linked Certificates

NS&I, the government backed savings provider, is changing the rate on its index linked savings certificates.  The products are popular because they pay 0.01% above inflation over two, three and five years.  However, from May, NS&I will be calculating inflation using the CPI (Consumer Products Index) and not RPI (Retail Prices Index).

The change means that a saver with £10,000 invested in the certificates will receive 1.91% using the new CPI measure and not 2.41% on the RPI measure, a fall of return of 20%.

While these certificates are no longer available to new customers, those with maturing products face the decision of whether to reinvest on the new lower inflation measure of move their money elsewhere. 

The products still beat the inflation measure but savers with certificates maturing from May onwards will find deals paying 0.50% or more than the current CPI measure if they switch to ordinary fixed rate bonds.  However, the certificates are tax free and are guaranteed to beat inflation so savers considering switching should weigh this up against what may look like a compelling initial case to move.

 

ABN Amro ISAs that are too good to be true

We often get approached by savers with deals and offers that they are concerned about which look too good to be true, which we are always happy to help with. 

The last version circulating is targeting savers hunting for better Isa rates as the ISA season peaks.  Savers should steer clear of fraudsters masquerading as the British asset management arm of one of the largest Dutch banks.  ISAs purporting to be from ABN Amro Asset Management offering 1 Year cash ISAs at 3% and easy access at 2.65% are a scam. 

Both ABN Amro and the Financial Conduct Authority are carrying warnings on their websites.  Although the rates don’t appear high, they beat the current top cash Isa rates of 1.62% for 1 Year and 1.47% for easy access easily.  The fraudsters appear to be using these lower headline rates to dupe savers in to believing they are authentic.

  

What are the best rates currently?

The savings market does move quickly, so we always recommend that you check our website for the latest rates.  At time of print, our best personal savings rates are:

 

Term

Interest Rate

Provider

Instant Savings

1.50%

Marcus and Virgin Money

Notice

1.90%

Secure Trust Bank

1 Year

2.20%

Bank of London & Middle East

18 Months

2.32%

Al Rayan Bank

2 Year

2.42%

Al Rayan Bank

3 Year

2.55%

Gatehouse Bank

4 Year

2.50%

Secure Trust Bank and Bank of London & Middle East

5 Year

2.75%

Gatehouse Bank

 

That’s all for this month.  If you don’t want to wait for next month’s update, then you can subscribe to our newsletter by submitting your email address on our website!

 

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We help savers get the best deal for their money by providing unique insight in to the savings market.  We help prospective banks apply for a banking licence and we help build customer services, products and marketing for them.  We also work with existing banks and building societies to improve their savings propositions.  This  insider view of savings means we are uniquely placed to help savers.

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