- Several best-paying savings accounts have already closed to new customers
- Most headline rates are variable and can change without much notice
- Fixed-rate accounts offer certainty, but lock money away for longer
Savers trying to earn the highest possible return on their cash are being cautioned that the best deals may not stay on shelves for long. After the Bank of England lowered interest rates in December, lenders have begun adjusting their savings products, a move that typically follows within weeks.
Many savings accounts track the base rate through what is known as a variable rate. When the base rate falls, the return on these accounts often drops too. That process now appears to be underway across the market.
Some high-profile offers have already been withdrawn. Revolut’s 4.5 per cent limited-time savings account closed to new applicants after January 22. At the same time, Nationwide Building Society is set to cut rates on more than 30 savings accounts, according to market updates, with other providers expected to follow if they have not already done so.
For the moment, a few competitive rates remain. Chase UK is still offering 4.5 per cent on an easy-access savings account, while cash ISA savers can find rates of around 4.33 per cent from Trading 212. However, these accounts are also variable, meaning returns could fall again if interest rates are reduced further.
This has led some savers to look at fixed-term accounts instead. These products usually guarantee a rate for a set period, but the downside is limited or no access to cash until the account matures.
A narrowing window for savers
Data from Moneyfacts shows that there were more than 1,400 savings accounts paying above inflation in recent weeks, with roughly half of them fixed-rate bonds. Caitlyn Eastell at Moneyfacts reportedly said January is often when people reassess their finances and check whether their savings are performing as well as they could.
Alice Haine at Bestinvest reportedly said savers hoping to preserve returns on cash held in banks and building societies may want to seek out competitive deals sooner rather than later. Eastell reportedly added that being slow to react could mean missing out altogether.
Consumer finance expert Martin Lewis reportedly said that after years of low returns, savings rates have staged a comeback over the past couple of years. He noted that although rates are easing from recent highs, many accounts still pay more than inflation, giving savers a chance to make their money work harder while the opportunity lasts.
