Savings rates are rocketing and tipped to go higher after the Express led criticism which put banks and building societies in the spotlight.
Shockingly low rates of return on cash despite soaring interest rates were highlighted by this newspaper, which has demanded financial institutions do better.
Savers are now being offered decent returns on cash as banks and building societies are forced to compete for depositors.
The Saffron Building Society has offered a regular saver rate of nine percent, the highest headline rate available since 2011.
It is the first time since March 2021 that any bank or building society has offered a headline interest rate greater than inflation, currently 8.7 percent.
Skipton Building Society launched a similar regular saver product at 7.5 percent. Rates are rising so fast comparison websites cannot keep pace. And analysts believe they will go higher yet.
HSBC announced yesterday it was boosting interest rates on its mysavings and premier savings youth accounts by 0.75 percent to five per cent with other increases across their savings products.
Anna Bowes, co-founder of Savings Champion, said: “For years savers were getting almost zero return on cash and they became reluctant to switch accounts as there was no point.
“Suddenly, after 12 interest rate rises by the Bank of England in the last 18 months there are rates out there that offer a meaningful return. Customers are switching again to get the best deals and that is forcing the banks and building societies to compete.
“As a result rates have begun rocketing so fast that it is becoming difficult to keep on top of them all and work out which ones are the best deal.
“This is having a big impact on the returns savers can now benefit from. For example, the best one-year fixed-rate deal on offer in December 2021 was 1.37 percent.
“Now the best rate you can get is 5.25 percent so it has made an enormous difference. Many analysts expect rates to go higher yet.
“The unexpectedly high CPI inflation figure of 8.7 percent last month means that the Bank of England may have to go further and bank rate is now expected to peak at 5.25 percent. If this happens, it will almost certainly result in higher savings rates coming onto the market.”
Laura Suter, head of personal finance at stockbrokers AJ Bell, said although higher rates were welcome, inflation was still a huge problem.
She said: “It is a glass half full at the minute. While higher rates are good for savers, the actual rates of return on offer are still lower than inflation in most cases.
“That means that in real terms over a year cash left on deposit will be worth less over time and other investments should be considered as part of a savings portfolio.”
She also said the regular saver options of nine percent offered by The Saffron Building Society on regular deposits up to £50 a month and 7.5 percent offered by Skipton on £250 per month were good for certain savers.
She explained: “You only achieve the headline rate of interest on the first month’s deposit because the account runs for one year.
“So if you have a lump sum, you can actually get a better overall rate in other types of account. But if you don’t have the savings to hand and it is genuinely new money being saved every month then these accounts offer good value and will encourage people to save which is excellent.”
Pella Frost, HSBC UK’s Head of Everyday Banking, said: “Over the last few years we have had to learn to adjust to the unexpected and build our resilience. Eight in 10 people are taking action to tighten their belts and reduce their outgoings in the face of cost of living challenges.
“Our new savings rates will hopefully help encourage people to revisit their savings habits.”
Andrew Bottomley, CEO of money at Skipton, added: “Paying better rates has made a real difference we can see in our customers. Savers are coming into branches and smiling when they see the rates which makes quite a change.”
He added 2,500 Regular Saver accounts had been opened on Thursday, its first day.
