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Savers dip into their savings to pay for bills as the cost of living and high mortgage rates hits people’s ability to save during July
With the rising cost of basics such as food and heating, not to mention rent and mortgages, saving for a rainy day has become impossible for many individuals and families in the UK.
In a recent survey The Money Pages reported that two in five people (40%) didn’t have enough money left over to put away savings each month, putting them without a source of income in the event of an emergency.
UK households withdrew a net £100m from National Savings and Investments (NS&I) accounts in July, following £200m of net withdrawals in June, according to the latest Bank of England Money and Credit report.
The NS&I is backed by the HM Treasury and widely known for monthly premium bond prizes of up to £2m.
Read More: Cost of living: Brits taking on debt at fastest pace in five years
National Savings and Investments
NS&I offers the following investment or savings products which might pay interest, stock market or inflation-linked returns.
Income Bonds
Premium Bonds
Direct ISA (a Cash ISA)
Guaranteed Equity Bonds
Direct Saver – a savings account
Investment account – a savings account you manage by post
Fixed Interest or Index-Linked Savings Certificates
Guaranteed Growth Bonds and Guaranteed Income Bonds
Junior ISAs.
“The government backed bank now offers the most competitive one-year fixed rate savings accounts on the market in a move that throws down the gauntlet to high street banks,” said Myron Jobson, senior personal finance analyst, at Interactive Investor.
Although NS&I offers peace of mind with its savings security, it doesn't necessarily mean its products provide the highest returns on investments.
Individual Savings Accounts
According to the Bank of England records people put more than £3bn into Individual Savings Accounts (ISAs) in July with the highest inflows since 2014.
“As more people realise the taxman could be coming for their savings interest, money has been funnelled into ISAS where interest and investment growth are tax free," said Laura Suter, head of personal finance at AJ Bell.
The Bank of England’s base rate of 5.25% has risen to its highest level in 15 years, those hoping to put a little aside are looking for the best savings accounts available, depending on whether they want easy access or to lock away their money for a fixed period of time.
Read more: Bank of England needs to keep interest rates high, says chief economist
Santander UK, on Monday introduced 5.20% or 5.08% interest rates gross (variable) on savings up to £250,000 for a 12-month period. For those maintaining a £5,000 balance, this means earning approximately £21.66 in monthly interest and £260 annually.
The savings account allows customers to deposit and withdraw funds without any fees or restrictions. You don't need other Santander accounts to open it, and can apply online, in-app, over the phone, or in-branch.
Santander is offering:
Santander Edge Saver (7.00% AER/6.78% gross for 12 months)
Easy Access Saver Limited Edition (Issue 3) (5.20% AER/5.08% gross for 12 months)
Fixed rate ISA (5.05%-5.10% AER/tax-free depending on term length)
Regular Saver (5.00% AER/gross for 12 months)
Easy Access ISA (3.20% AER/tax-free variable for 12 months)
The account is available until 17 September.
MoneyToTheMasses recently compiled their own list of top easy access, notice and fixed-rate saving accounts with banks offering best Interest rates on Savings.
Here's a quick dive into the list:
1. Best Regular Savings accounts
A savings account requires paying a regular sum each month with for a better interest rate.
First Direct, Regular Saver Account is offering an AER of 7.00% with a minimum opening balance of £25. Minimum deposit required is each month is £25, up to a maximum of £300 per month. Only available to holders of First Direct 1st Account.
Barclays, Rainy Day Saver is offering 5.00% gross on balances up to £5000 and 5.12% AER, with an opening balance of £1 and instant access to your money.
The Post Office, Online Saver account is offering 4.70% gross/AER variable with a 3.15% gross fixed rate bonus for 12 months.
2. Best High Interest Savings account
Nationwide Building Society, FlexDirect Account is offering 5.00%, with no minimum opening balance. Interest reverts to 1.00% after 12 months, but also reverts to 1.00% if a minimum of £1,000 is not deposited each month during the first year. Interest is only paid on balances up to £1,500.
3. Best Fixed Rate Bond Savings accounts
A fixed-rate bond locks your money for a set period of time at a fixed savings rate.
Smart Save, 1 Year Fixed Rate Saver is offering 6.01%, but has a minimum opening balance of £10,000.
Secure Trust Bank, 6 Month Fixed Rate Bond is offering 5.55%, with a minimum opening balance of £1,000 deposited within 30 days of opening the account.
Ahli United Bank UK via Raisin, 9 Months Fixed Term Deposit is offering 5.79% with a minimum deposit of £1,000 up to a maximum of £85,000.
4. Best Easy Access account
Savings account where you can pay in and take out money whenever you need to.
Furness Building Society, Triple Access Saver (Issue 1) is offering £5.00%, with a minimum opening balance of £1.
5. Best Children’s Savings account
An account specifically for children's savings and available through either an easy access or notice accounts.
Saffron Building Society, Children’s Regular Saver is offering 5.80%, with a minimum opening balance of £5. No minimum age to open, but a maximum age to open is 15.
6. Best Notice accounts
A savings account that has has no fixed term but requires a notice period before you can withdraw your money.
Oxbury, 180 Day Notice Account Issue 15 is offering 5.59%, with a minimum opening balance of £1,000.
West Brom Building Society, WeBSave 60 Day Notice account is offering 5.25% with a minimum opening balance of £1 and a maximum balance of £1 million.
7. Best Junior Cash ISA
Coventry Building Society, Junior Cash (2) is offering 4.95% with a minimum opening balance of £1.
8. Best Cash Lifetime ISA
Moneybox, Cash Lifetime ISA is offering 4.00% with an opening balance of £1. There is a 25% government bonus each month if a deposit has been made. There is a 25% withdrawal charge unless the holder is aged over 60, or it is being used for the purchase of a first home. A 0.75% bonus is paid for the first 12 months.
9. Best Fixed Rate Cash ISA
UBL, 1 Year Fixed Rate Cash ISA is offering 5.77%, with a minimum opening balance of £2,000.
10. Best Notice Cash ISA
The Loughborough Building Society, 180 Day Notice Cash ISA is offering 5.00%, with a minimum opening balance of £20,000.
11. Best Easy Access Cash ISA
Newcastle Building Society, Double Access ISA (Issue 1) is offering 4.50%m with a minimum opening balance of £1.
12. Best Business Fixed Rate Bond
Different business savings accounts that include easy access, notice and fixed-rate bond accounts but designed for only business savings.
Close Brothers, 1 Year Fixed Term Deposit is offering 5.10%, with a minimum opening balance of £10,000.
13. Best Business Notice account
United Trust Bank, Business 180 Day Notice Base Rate Tracker is offering 5.25%, with a minimum opening balance of £5,000 and a notice period of 180 days.
14. Best Business Easy Access accounts
Shawbrook, Easy Access Business Account Issue 10 is offering 3.25% with a minimum opening balance of £1,000.
Cahoot, Simple Saver is offering 4.90% for 1 year, with a minimum opening balance of £1 and a maximum of £2 million.
15. Best One-Year Fixed Savings
A savings account designed for savers looking to lock their money away for a fixed term of one year.
NS&I, Guaranteed Growth Bonds is offering 6.20%, with a minimum investment of £500 up to a maximum of £1 million.
Investec, 1-Year Fixed Rate Saver is offering 5.50%, with a minimum opening balance of £5,000 up to a maximum of £250,000.
16. Best Two-Year Fixed Savings
An saving account that locks away money for two years to earn a competitive fixed interest rate.
Ford Money, Fixed Saver is offering 6.05% with a minimum opening balance of £500.
OakNorth Bank is offering 6.00%, with a minimum opening balance of £1.
17. Best Three-Year Fixed Rates
A savings account where the rate is locked in for 3 years and a saver cannot withdraw funds without incurring a penalty.
Hampshire Trust Bank, 3 Year Bond is offering 5.95%, with a minimum opening balance of £1 up to a maximum of £250,000.
Cynergy Bank, Fixed-Rate Bonds is offering 5.95%, with a minimum opening balance of £1,000 up to a maximum of £1 million.
18. Best Five-Year Fixed Rates
A three, four and even 5-year fixed rate ISA means that you can benefit from some of the highest savings rates available according to MoneyFactsCompare.
United Trust Bank, Fixed Term Bonds is offering 5.75%, with an opening balance of £5,000 up to a maximum of £1 million.
Recognise Bank, 5-Year Fixed Rate Account is offering 5.75%, with a minimum opening balance of £1,000 up to a maximum of £85,000.
Read more: LIVE: FTSE and European markets rise amid forecast of UK recession and insolvencies
Finally why not visit savings best buys to compare the best deals and latest savings rates.
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