SAVERS looking to make the most of their cash can now get more back as savings rates hit a 13-year-high.
Interest rates are on the rise and banks are finally upping the rates offered to savers.
1Banks are finally passing on interest rate rises to saversCredit: Getty
Banks are now fighting one another for new customers by offering more attractive interest rates – and one bank is offering savers 4.1%.
The Bank of England has raised the base rate seven times over the last few months, from a low of 0.1% to 2.25% and while it’s bad news for borrowers it’s great for savers.
Higher interest rates allow savers to get a higher rate of return when they save their hard-earned cash.
And with the Bank of England set to raise rates further into next year, savers will continue to be rewarded.
It’s predicted that interest rates may hit 6% next year.
App-only challenger bank, Atom, is now offering savers 4.11% returns on savings of £50 or more in a one-year fix.
It would mean that if a customer saved £1,000 across the year they’d expect to gain £41.10 over the period.
But as the account is fixed, you can also only make your deposits within the first week of opening the account.
After that, you can’t withdraw the cash for a year or two depending on which account you go for.
According to MoneyFacts, this is the highest one-year rate on offer since 2009.
It is also important to keep in mind you can only open and manage the account using the bank’s app, which is available both for iPhone and Android users.
Rachel Springall, finance expert at MoneyFacts, said: “Challenger banks and mutuals are offering some of the best savings rates out there, so considering the more unfamiliar brands is incredibly important, and there is little reason to overlook them if they have the same protections in place as a well-known brand.
“As interest rates continue to climb the attitude of savers may be to fix for the shorter-term or even choose easy access accounts as a temporary stop gap so they could have more flexibility to lock into even higher rates.
“There may well be savers out there who may sit and wait for even higher returns, but as with any deal, they are not guaranteed to last forever and if a provider fills their savings targets they can pull the account entirely.”
We’ve listed the other best savings accounts available right now which require a deposit of £1,000 or less.
Other fixed rate savers – rates up to 4.55%
These offer some of the highest interest rates – but this comes at the cost of being unable to withdraw your cash within the agreed term.
If interest rates increase during your term you can’t move your money and switch to a better account.
Secure Trust Bank offers a two-year fixed saver paying 4.55% back on savings of £1,000 or more.
The same bank also offers a one-year fixed saver paying more than Atom Bank at 4.2%, but you’ll need savings of £1,000 or more.
Virgin Money’s one-year fixed saver offers 4% interest on any balance above £1.
Regular savings accounts – rates up to 5.12%
These accounts generate decent returns but only on the basis that you pay in a set amount each month.
Natwest’s Digital Regular Saver pays 5.12% on all balances between £1 and £1,000.
First Direct’s Regular Saver Account pays 3.5% back on savings between £25 and £3,600.
Notice savings accounts – rates up to 2.95%
These savings accounts come with lower rates than those offered by regular savers, but customers can withdraw their cash freely by giving notice.
Most notice accounts require that the customer gives 30, 60, 90 or 180 days’ notice before being able to withdraw their cash.
Penrith Building Society’s 90-Day Notice Account pays customers 2.95% interest if they save at least £500 – customers will need to apply in a branch.
Secure Trust Bank’s 180-Day Notice Account pays 2.6% on balances above £1,000.
Easy-access savers – rates up to 2.35%
These savings accounts do what they say on the tin – they usually allow unlimited cash withdrawals.
However, this perk means they tend to come with lower interest returns, but there are a number of accounts worth considering.
Yorkshire Building Society’s Rainy Day Saver pays 2.5% on balances between £1 and £5,000 and 2% on everything thereafter.
Cambridge Building Society’s Your Saver pays customers 2.1% back on balances £100 and over.
Check comparison websites
With your current rates in mind, don’t waste time looking at individual banking sites to compare rates – it’ll take you an eternity.
Research websites like MoneyFacts.co.uk and price comparison websites such as Compare the Market, Go Compare and MoneySupermarket will help save you time and show you the best rates available.
These sites let you tailor your searches to an account type that suits you.