Savings provider increases interest rate to 3.9 percent

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Investec is increasing the interest rate on its Fixed Rate Saver from 3.30 to 3.90 percent, in a move to provide competitive savings accounts for its customers. The move follows the Bank of England base rate rise last week from 1.75 to 2.25 percent.

Savings providers are slowly improving their rates after the Bank of England increased interest rates by another 0.5 percentage points in September.

While it’s bad news for people with mortgages or any type of debt – it does mean that anyone with savings should now get a better return.

Investec has announced it is increasing the rate on its fixed-term account but people will need to have at least £5,000 to open an account.

No withdrawals are permitted until the end of the one-year period, and no further deposits can be made after the first seven days.

Investec is one of a number of savings providers that have increased their interest rates following the Bank of England base rate increase last week.

NS&I (National Savings & Investments) also announced today that it is increasing its prize fund rate from 1.40 percent to 2.20 percent.

This decision will add £76million to the prize fund for October and will see the number of £5,000, £10,000, £25,000, £50,000 and £100,000 prizes almost double.

This is the second increase to the Premium Bonds prize fund rate in the last six months.

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Savers are being urged to act with caution as experts predict savings accounts could soon offer an “incredible” eight percent interest rate. 

Myron Jobson, senior personal finance analyst at Interactive Investor said it’s vital that savers look around for the best deal.

He said: “Rising prices could still erode the purchasing power of cash savings over time.

“This makes it vital savers pick the most competitive account.”

Atom Bank has a two-year fixed-rate bond available paying four percent but if interest rates continued to rise it might not be long before Britons can expect rates to rise by up to eight percent.

However, some experts are urging people to stop delaying and look around if they are getting less than three percent interest on their savings. 

Derek Sprawling, savings director of challenger bank Paragon urged savers to stop delaying placing their money in saving products.

He said: “Irrespective of the rate of increase, expectations remain that the Bank is on a course of rises that will reach to a Base Rate of 4.0 percent in the second quarter of 2023.”  

Meanwhile, NatWest is offering savers a five percent interest rate plus £175 in free cash if they switch. 

NatWest customers will also have the chance to win £1,000 through the Round Ups feature.

This automatically sends spare change into their savings account if customers choose to opt-in.

The £175 switching bonus is available to new customers who use the Current Account Switching Service (CASS).

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