Savings rates have been analysed by Hargreaves Lansdown (HL), who examined how the savings market is performing in the run up to March. They noted savings rates have fallen, particularly fixed rates, with the average one-year rate sitting at just 0.26 percent, down from 0.97 percent in January 2020.
Despite this, the actual amount of money sitting in savings accounts is growing, as HL explained: “The savings market is growing faster now than it did in 2006 when the base rate was five percent.
“Bank of England figures show that the UK saved £143.5billion between March 2020 and January 2021, and the Centre for Economics and Business Research predicts another £165billion will be saved in 2021, because downturns tend to boost savings.”
HL went on to examine NS&I themselves, noting that the institution is set to benefit from difficult economic conditions: “In the last quarter of 2020, NS&I reported net withdrawals of £9.5billion.
“However, this was actually made up of inflows of £16.5billion and outflows of £26.5billion.
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“These are bound to be popular, and are likely to mop up some of the excess savings sloshing around.
“Triodos already offers its own green savings products, and Gatehouse Bank has launched some more recently.
“We may see more iterations of these cause-based savings accounts as banks try to differentiate on proposition instead of price.”
While savers may be tempted to invest their money with NS&I in light of their new products but following Rishi Sunak’s announcement, Martin Lewis cautioned consumers on their long-term prospects.
Elsewhere, the best savings options have been examined by Rachel Springall, a Finance Expert at moneyfacts.co.uk., who explained the best savings products can be found with Investec Bank plc and/or Ford Money.
On Investec Bank’s Online Flexi Saver account, Rachel had the following to say: “Investec Bank plc has re-launched its Online Flexi Saver, an easy access account, back onto the market this week. Paying a rate of 0.40 percent the deal takes a place in our top rate tables when compared against other easy access accounts. Savers looking for some flexibility when it comes to their savings may then find this an attractive option due to its straightforward structure, unlike some of its peers that have restrictions on withdrawals.”
In concluding her analysis, Rachel had the following to say on Ford Money’s Fixed Saver two year deal: “Ford Money has removed its existing customer restriction and reduced rates on a selection of its Fixed Savers by up to 0.15 percent this week, but the two-year option remains competitive.
“Now paying 0.70 percent, the Fixed Saver 2 Year takes a spot in our top rate tables and may appeal to savers who are comfortable to tie their money up for the duration of the deal as earlier access is not permitted.
“However, unlike its peers, the bond has a smaller minimum investment of £500 and will allow further additions within the first 14 days of opening the account.”
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