Today's figures show that inflation remained at 2.4% for June, with 17 savings accounts (based on a £10k deposit) that can currently match or beat it. While this may disappoint savers looking for a real return, there is some good news to report, as one-year fixed rate bonds have now surpassed the rates seen two years ago.
This relates to both the average rate and the top rates, with the Best Buy deals available over one year today not far off the Consumer Prices Index figure of 2.4%, as they sit above 2%. "A month ago we saw the first 2% one-year fixed bond since August 2017, from Gatehouse Bank," explained Rachel Springall, finance expert at Moneyfacts.co.uk. "In retaliation for this table-topping one-year bond, Atom Bank increased its one-year rate to the now market-leading 2.05% last week."
As a result, these rates can rival the top rates seen in 2016. Additionally, Rachel found that "the average one-year bond rate stands at 1.29%, the highest recorded rate since April 2016 when it stood at 1.31%."
And that's not the only good news to report. Savers should start to notice better rates overall, as rate rises have outweighed cuts for 17 consecutive months, with Rachel recording 115 rises in May and just 44 cuts. "What a difference a year or two can make when it comes to savings interest," she said. "Right now, providers are increasing rates and sparking competition within the Best Buys, whereas two years ago 156 savings cuts outweighed 18 rises and inflation sat at a remarkably low 0.3%."
"Still, savings rates have a way to go before they can come even close to paying the rates seen a good six years ago," she then added. When it comes to the best deals, you may have noticed that unknown brands dominate the charts. That's because they are more eager for savers' funds, with Government lending initiatives still seeing the big providers not needing new deposits.
As these challenger banks tend to come with the same depositor protection guarantee, however, there's no reason not to trust them. The same goes for saving online or via smartphone app. With the best rates often coming from accounts that can only be opened or managed virtually, you may be ignoring them at your own risk.
Rachel concluded: "Savers as always will want to act fast to take advantage of the top rates, but they should also be mindful of locking into a fixed bond prematurely. If this does happen, savers should carefully check the terms attached to any cooling-off period before they try to extract their funds, as in most cases there will be a penalty to pay for those who change their mind."