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September Savings Round Up

Another month of tumbling rates

I wrote in last month’s column about falling interest rates and August was another month where we witnessed a number of providers cutting their interest rates on savings.

1 Year Fixed Rate Bonds have now fallen back below 2% (excluding expected profit rates from the Islamic banks), with the best interest rate now 1.97% from United Trust Bank, followed closely by 1.95% from SmartSave. Both of these have small balance sheets so I expect neither rate to be around for more than a couple of weeks at best.

There’s also virtually no premium for saving for the longer term with 1.98% (Charter Savings Bank) being offered on 18 months, 2.01% on 2 Year (OakNorth) and 2.15% (Zenith Bank) on 3 Year. 5 Years does see a small step up to 2.40% (PCF Bank) but there’s little incentive for savers to commit beyond 1 Year in this market.

I’d highly recommend anyone seeking fixed rate savings to secure any attractive rate quickly, as some competitive products are lasting a matter of days. Many providers allow a ‘funding window’ to deposit your savings in to the account. This means that you can open your account without having the money available to pay in. These funding windows can be up to 31 days but are typically around two weeks. It’s worth applying for the product, and securing the guaranteed rate, even if you need a few days to access the money you want to put in, rather than waiting until you have the funds available and risk seeing the product withdrawn or rate drop.

Will easy access rates follow suit and fall back?

Although we have witnessed fixed rate bond interest rates falling back, easy access ones have so far remained firm with best buy rates holding at 1.50%. There has been a number of providers paying just below this, giving support to my belief that this level will be maintained.

We have seen the first sign of some movement in easy access this week with Virgin pulling its 1.50% best buy rate and replacing its Double Take esaver with issue 11 paying 1.43%. This leaves just Marcus (1.50%) and Shawbrook (1.48%) above it with a the following pack behind it paying between 1.35% - 1.42%.

While I don’t expect this to change – I fully expect Marcus to continue to maintain its best buy position with the 1.50% rate - we could see Shawbrook fall back and savers interested in either account should consider securing those rates now, just in case.

How to keep your Marcus bonus rate

Marcus best buy rate of 1.50% includes a bonus of 0.15% for a year. Normally, this could be circumvented by opening another account but you cannot currently open another Marcus account again so this trick doesn’t work. However, there is a very easy way to hold on to the bonus rate. Marcus pledges to pay existing savers exactly the same rate as new ones within their 12 month bonus.

Existing customers should log into your Marcus account go to 'view' and scroll down, where they will see a link on the right-hand side titled 'Review your savings.’ Underneath this is your bonus rate expiry date. If you follow this link, it will give you a page titled 'Your bonus rate options'. There you can choose to roll that bonus rate over for another 12 months.

It’s certainly worth existing Marcus savers considering exercising that option now to guarantee another 12 months of the 1.50% rate.

Banking Directory

As mentioned in last months’ column, we have launched a banking directory on our website to provide more information on some of the newer names in the savings market. With almost 50 new providers entering the market in the past decade, there’s a number of unfamiliar names in our best buy tables that savers won’t find on the high street.

The first banks covered are Atom, Cambridge & Counties, OakNorth, PCF, Redwood, and SmartSave. More banks will be added in the coming weeks and months until all providers are covered.

What are the best rates currently?

As we have witnessed in the past couple of months, the savings market can change extremely quickly. 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

Notice

1.85%

PCF Bank

1 Year

2.10%

Bank of London & Middle East

18 Months

2.25%

Bank of London & Middle East

2 Year

2.35%

Bank of London & Middle East

3 Year

2.45%

Bank of London & Middle East

4 Year

2.25%

Bank of London & Middle East

5 Year

2.50%

Bank of London & Middle East

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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