Savings accounts where you LOSE money: Don't fall into this trap, open these instead, says SYLVIA MORRIS
- These three High Street banks are the worst culprits, here's how to beat them
Scary figures crossed my desk last week – we have some £660 billion of our savings in accounts that are losing money for us because we are earning less than the rate of inflation.
A shocking 67.6million adult savings accounts pay 3.5 per cent or less while inflation is running at 3.6 per cent as measured by the consumer prices index. If you are in one, you need to move your money now.
Among the worst is Halifax Instant Saver where the rate fell from a lowly 1.05 per cent last week down from an already grim 1.1 per cent on sums up to £25,000.
Lloyds Standard Saver pays the same dismal rate. So does its Instant Cash Isa along with Halifax Instant Isa Saver.
Santander pays 1 per cent on its Everyday Saver where you end up once you have been in its Easy Access Saver or Limited Access Saver for 12 months.
NS&I bucked the trend among savings providers last week and raised the rate on their Guaranteed Growth and Guaranteed Income Bonds
A better deal can be had elsewhere. The top no-strings attached easy access savings account comes from Atom's Instant Reward Saver and pays 4.6 per cent, while Cahoot's Simple Saver pays 4.55 per cent, although that is thanks to a 3.41 per cent 12-month bonus.
The top easy access cash Isa rates come from saving and investing apps Trading 212 and Plum, both at 4.82 per cent. They also have 12-month bonuses, at 0.72 per cent and 1.53 per cent, respectively.
> Check the best easy access savings rates in our tables
> Check the best cash Isa rates in our tables
Don't ignore these NS&I fixed rate bonds
If you want to fix your savings, then I think savers have been too hasty to write off the newly improved Guaranteed Growth and Guaranteed Income Bonds from National Savings and Investments (NS&I).
NS&I bucked the trend among savings providers last week and raised the rate on these one-year fixed rate products.
It increased the rate on its Growth Bond from 4.05pc to 4.18pc – an extra £13 interest a year before tax on each £1,000 invested.
The rate on the Income Bond – which pays out interest each month rather than just once at the end of the year – rose from 3.98pc to 4.11pc. Critics were quick to suggest that despite the rises, these bonds are not competitive.
I beg to differ.
If you have used your cash Isa allowance to make the most of tax-free saving, I think they look like a good deal. Their rates are above the average, which is 4.02 per cent according to rates scrutineer Moneyfacts. And they stand up well against well-known banks and building societies.
Only Nottingham BS and Kent Reliance beat it – and only just at 4.25 per cent and 4.21 per cent.
As providers cut rates last week, big banks now pay far less. Halifax and Lloyds are down at just 3.4 per cent, Barclays 3.6 per cent, Santander 3.7 per cent and NatWest and HSBC 3.8 per cent.
Building societies are also offering less with Nationwide at 3.8 per cent, Coventry 3.7 per cent, Skipton 3.75 per cent while Yorkshire, Leeds and Principality offer a slightly better 4 per cent.
It’s true there are better rates around if you’re happy opting for one of the newer online banks.
The top one-year bonds come from GB Bank (4.53 per cent) Union Bank of India (4.47 per cent), Stream (4.41 per cent), Vanquis (4.46 per cent), RCI Bank and Chetwood Bank (4.4 per cent).
GB Bank will pay you £453 a year on a £10,000 holding against £418 from NS&I. Effectively you are paying £35 to go to NS&I.
> Check the best fixed rates in our tables
The larger your balance the bigger the premium. But many savers prefer to stick with more familiar names, and if you’re one of them, NS&I is the place to go.
NS&I bonds can also be a good option if you have large deposits. NS&I gives full protection on your deposits up to £1million.
Other savings accounts typically only have protection under the industry-based Financial Services Compensation Scheme, which guarantees that your savings are protected up to the £85,000 limit should your provider go bust.
