While the Bank of England Base Rate remains at a four percent high, banks and building societies have been upping interest rates on savings accounts nearly month-on-month, offering savers increasingly higher returns. HSBC is currently awarding savers a competitive rate on its easy access account – and people can get started with just £1.
Easy access savings accounts are one of the simplest accounts to manage as they typically enable savers to make payments and withdrawals with minimal restrictions and small opening deposit requirements.
HSBC’s Online Bonus Saver is currently offering an Annual Equivalent Rate (AER) of 3.25 percent, calculated daily and applied to the balance monthly.
The three percent rate is awarded on up to £10,000 of the balance every month a withdrawal is not made, while 1.75 percent AER will apply to figures over £10,000.
While this is an easy access account, meaning savings can be withdrawn, it isn’t flexible and on the occasion that a withdrawal is made, a 1.2 percent standard rate will be applied to that month instead.
The account can be opened by those aged over 16 who hold a HSBC current or saving account, and it can only be managed online.
But while HSBC is offering a particularly attractive rate of return, it doesn’t quite take the top spot of high interest easy access savings accounts.
As per moneyfactscompare.co.uk’s Best Buys list, online savings app Chip tops the table with an AER of 3.4 percent.
The account can be opened with a minimum of £1 and up to £250,000 can be invested overall.
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Withdrawals are permitted without penalty and as it’s an app-based account, savers must be comfortable opening and managing it online via mobile.
Yorkshire Building Society’s Rainy Day Account (Issue 2) falls just behind with an AER of 3.35 percent.
This account offers a competitive, two-tiered variable interest rate and savers can get started with as little as £1. The 3.35 percent rate is applied to balances up to £5,000, while a 2.85 percent rate is applied to balances over £5,000.01.
Withdrawals are permitted on two days per year based on the anniversary of account opening, plus closure at any time.
Zopa bank is also offering a competitive AER of 3.21 percent on its Smart Saver.
Zopa allows customers to open personalised pots, however, a maximum of £85,000 can be deposited to the account in total before account holders are no longer allowed to submit any more cash. There is no minimum deposit and interest is paid monthly.
The Bank of England Base Rate announcement is expected to take place next week. Analysts anticipate an increase of a quarter of a percentage point, taking the Base Rate up from four percent to 4.25 percent.
However, while the recent ONS labour market report indicates a slump in pay growth, investors are cutting their bets that this move will take place.
Pantheon Macroeconomics’ Samuel Tombs said the wages figures strengthened the case for a Bank of England rate pause after 10 rises in a row.
He said: “Admittedly, labour market slack is increasing only gradually. Nonetheless, surveys show recruitment difficulties are no more pronounced than before the pandemic and redundancies look set to pick up over the coming months.”
However, Yael Selfin, chief economist at KPMG UK, pointed out that while the ONS data showed a slowing of pay growth, more recent measures showed little change recently.
He said: “Coupled with stronger-than-expected GDP data, this should provide enough evidence for the Bank to raise rates when it meets next week.”
The Bank of England Base Rate decision will be announced on Thursday, March 23.
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