- Research from Moneyfacts has revealed that easy access savings accounts have delivered the most disappointing rates of the year - with an average rate of just 0.47%.
- Its research showed that fixed rate bonds over one and five years have recovered from rock bottom rates in January and February this year, and are almost at the levels last seen in July 2016. Meanwhile, easy access still falls short.
- The Moneyfacts figures reveal how important it is to get active with your savings.
Sarah Coles, personal finance analyst, Hargreaves Lansdown:
"Many rates have dragged themselves up from the murkiest depths they sunk to in January and February this year. The Moneyfacts figures show that the average easy access rate is 0.47%, while the average return on a five year fixed rate bond is 2.03%, and the average one-year bond offers 1.17%. Unfortunately, despite the rises, rates are still struggling to tread water. Not one standard savings rate keeps pace with inflation at 3.1%."
"It’s not worth holding your breath and hoping for better rates, you need to get moving. The key is to stop thinking about all your cash savings as a lump sum to stick in a bank account and forget. The best rates are available to those who turn their cash savings into a portfolio, and then ensure each slice of the portfolio is working as hard as possible."
"You ideally need 3-6 months’ worth of expenses in easy access accounts, where you can earn up to 1.36% in an easy access savings account or up to 5% (on the first £2,500) in a high interest current account."
"Then, if you are saving for a goal in a year’s time, you can consider regular savings accounts, which can offer up to 5%. For 1-5 years, you can look into the relevant fixed rate bond – where you can earn up to 2.06% over two years and 2.51% over five years."
"For longer periods it’s important to consider whether at least part of the portfolio should be in stocks and shares. Your capital is at risk, but over 5-10 years or more, shares offer more potential for growth than cash."
"Finally, don’t neglect your ISA allowance. The Moneyfacts figures show cash ISA rates lagging behind savings accounts – with an average rate of 1.07%. Given the personal savings allowance, it’s easy to think cash ISAs aren’t worth bothering with, because basic rate taxpayers get the first £1,000 of interest free of tax anyway. However, it only takes a rise in interest rates, an increase in salary (higher rate taxpayers only get a PSA of £500), your savings to build up, or a change in government policy, and you may well find yourself wishing you had secured your ISA allowance while you could."