Savings Round Up: The Best Easy Access rate for 15 months and why it’s time to look again at Premium Bonds
The past few days have seen two very noteworthy movements in the savings market.
Firstly, on Friday, Birmingham’s Paragon Bank launched a new easy access account paying 1.31%. This is the highest rate seen on the market since August 2016. It also follows rate reductions or withdrawals from several providers including Virgin, Ulster Bank and West Bromwich Building Society.
This did look like the start of some downward pressure on easy access rates following a 30% rise in 2017. So, the move from Paragon, which bolsters some fierce competition at the top of the market along with BM Savings and RCI Bank (both paying 1.30%) and Essex based Shawbrook (1.20%) and Ford Money (1.17%).
Secondly, National Savings & Investments (NS&I) announced that they will be passing on the full 0.25% rise in the Bank of England Base Rate announced last week. The increase at NS&I will take place from 1st December and particularly significant is that it will apply to Premium Bonds.
Premium Bonds are often seen as a flutter and alternative to the National Lottery with their two £1m top prizes and several other pay outs worth tens or hundreds of thousands of pounds. However, the rate on the prize pot will now increase to 1.40% - better than any other instant savings rate. This means that someone with £10,000 invested should expect to earn £140 a year in prizes with average luck.
With a £25 minimum prize, a holder with £10,000 and average luck should win 5 or 6 of these per year. However, there’s always the potential for a bigger win and the excitement that comes with each draw! Unlike the lottery, you don’t lose your stake either!
Savers who need access to their money, but don’t need a guaranteed income, may want to look again at Premium Bonds.