The financial landscape is poised for a potential shift as the Bank of England is expected to cut the base rate from its current level of 4.75% when policymakers convene on June 2nd. This anticipated change comes amidst a backdrop of varied interest rates across different savings products, providing both challenges and opportunities for savers. Premium and Plus account holders have already seen their rates increased to 4% and 4.25%, respectively, reflecting the competitive nature of the market.
In the current climate, several providers are offering attractive rates for short-term bonds. Raisin UK and Zenith Bank UK are among those offering six-month bonds with a competitive rate of 4.7%. Meanwhile, JN Bank UK is leading the charge with the top-paying five-year fixed bond at a rate of 4.8%. Notably, the minimum opening balance for this bond is set at an accessible £100, making it a viable option for many savers.
Other notable players in the five-year fixed bond market include Close Brothers Savings and Shawbrook Bank, both offering rates of 4.52%, and Atom Bank at 4.5%. These rates underscore the relatively high returns available to those willing to commit their funds for longer periods.
“For the first time in 18 months, a five-year bond is paying more than the top one-year bond – great news for savers looking to lock in higher returns,” – Anna Bowes
The interest landscape extends beyond bonds, with fixed-rate cash ISAs offering up to 4.55%. Easy-access accounts have experienced significant fluctuations over recent years, yet certain offerings stand out. Plum and Moneybox apps are currently providing top-paying easy-access cash ISAs at rates of 5.06% and 5%, respectively.
Instant-access accounts are also seeing competitive rates. Chip, for example, has boosted its rate to 4.7%, while Revolut has similarly increased its savings rates. Meanwhile, Chase Saver offers a standard rate of 3.75%, with new customers benefiting from a 0.95% interest bonus for six months.
The one-year fixed bond market has seen a decrease in average rates to 2.92%, influenced by last year’s two base rate cuts by the Bank of England. However, there are still opportunities to secure higher returns, with the highest-paying one-year fixed bond currently offering a rate of 4.77%.
Savers should be aware of the Isa allowance for the current tax year, which permits up to £20,000 in savings. This limit provides an opportunity for tax-efficient saving, which should not be overlooked in strategic financial planning.
“Therefore, some savers may feel inclined to adopt a wait-and-see approach until nearer the new tax year,” – Anna Bowes