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Savings accounts – green shoots for savings rates?

As some banks begin to improve savings rates, we look at two ways savers can make sure they don’t miss out.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Ryan Kenny

Published on 21 August 2020

This article is more than 6 months old

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

Headlines over the past few months have made tough reading for savers. Although as a nation we’ve been saving record amounts since lockdown began, rates have more than halved on some products.

Most high street banks are now offering just 0.01% on instant access accounts. That’s just £1 interest after a year on a savings pot of £10,000.

But is the bad news about to change?

Average savings rates

Source: Bank of England 31 July 2020.

This article is not personal advice.

Green shoots for savings rates

Some banks are starting to raise interest rates on short term fixes. On Active Savings you can now get more than 1% on a 1 year fix through Charter Savings Bank. In fact, you can choose from 5 market leading* rates across a range of fixed terms.

Although this is good news for savers, these increases could be short lived. You might need to act fast. We’re finding that products are only available for a short time and in some cases where banks are looking for money to fund specific lending opportunities. So it’s too early to tell if this is the start of a wider rise in market rates.

Lots of banks will still be able to access cheap funding from the Bank of England (BoE) through the Term Funding Scheme. This means they can borrow money from the BoE at just 0.1%, so they don’t need to go out to savers to bring as much money in.

How to take advantage of rising rates

Open an Active Savings Account

Active Savings lets you choose from a range of savings products across multiple banks and building societies, all within one online account. Select from easy access or fixed term products up to three years.

It’s easy to open an account and you don’t need to add any money until you’re ready to choose a savings product. So you could set up an account and be ready to act when a good rate becomes available.

Find out more
Get free alerts

Be one of the first to know when a good rate is added to Active Savings by signing up to our alerts. You can even choose which products you’re interested in.

Sign up

Products available through Active Savings can be added or withdrawn at any time. Minimum deposit requirements apply to individual products. Instant access products allow immediate cash withdrawals, Active Savings offers easy access products where withdrawals usually take one working day. Inflation can reduce the spending power of money.

*Checked against Moneyfacts on 21 August 2020 at 8.20 am.

The Active Savings service is provided by Hargreaves Lansdown Savings Limited (company number 8355960). Hargreaves Lansdown Savings Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 with firm reference 901007 for the issuing of electronic money.