While the Bank of England Base Rate rests at a 14-year high of 4.5 percent, high street banks and building societies have been rewarding savers with higher interest rates across their own products.
OakNorth Bank has recently boosted the interest rate on its 30 Month Fixed Term Saving Account to a more competitive 5.28 percent.
Fixed savers help another layer of certainty to saving, as these accounts enable people to lock in the interest rate at the time of opening. It means the bank cannot change the rate until the end of the fixed term.
However, these accounts typically come with a few more limitations, such as stricter withdrawal rules, making them better for those intending to save long-term without needing to dip in.
Savers can open OakNorth Bank’s 30-Month Saver with a minimum deposit of just £1 and up to £500,000 can be invested overall.
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Interest is calculated daily and applied when the account matures, but withdrawals are not permitted throughout the term.
Commenting on the deal, James Hyde, spokesperson at Moneyfactscompare.co.uk, said: “OakNorth Bank has increased the rates on a selection of its Fixed Term Savings Accounts, with its 30-month bond highlighted in our Pick of The Week this time.
“Paying 5.28 percent gross, it sits high in our charts among bonds of less than three years.”
He said that while a minimum investment of just £1 may appeal to investors, they should also note no early withdrawals are possible.
He added that further additions are permitted for two weeks from the account opening and overall, “the deal receives an Excellent Moneyfacts product rating.”
But while many savings accounts are paying some of the highest returns seen in decades, Britons don’t appear to be capitalising on the new interest rates, new research has found.
According to Chetwood Financial’s study, more than two in five (44 percent) savers think higher interest rates have made fixed-term accounts more attractive. However, the overwhelming majority of respondents (97 percent) said their cash was held in a current account.
Chris Daniels, chief commercial officer at Chetwood Financial, commented: “With the Base Rate sitting at 4.5 percent – the highest rate since 2008 – savers and investors should be earning more interest on their savings.
“However, our research shows that consumers with a healthy pot of savings in reserve aren’t using different products to their advantage. Adding to this, the fact that many traditional banks have recently broken away from the tradition of passing on higher interest rates to their customers, and savers could be missing out on potentially huge gains.”
Mr Daniels added that the majority of current accounts on the market “pay little if any, interest”, so many savers could benefit from exploring how other accounts can better support their savings goals.
He continued: “As a rule of thumb, secure, fixed-term accounts often offer the highest interest rates for those looking to deposit a larger sum of money, while branching out from traditional high street banks can also be an opportunity to benefit from more competitive rates.”
