Boost for savers as rates rise to highest levels in nearly a decade

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According to market analysis, the average rates offered on some savings accounts have reached their highest level in almost a decade.

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At 0.84%, the average easy access rate is at its highest since the rate of 0.87% was recorded in December 2012, said.

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A year ago, in September 2021, the average easy access rate was only 0.17%.

Savers can generally get higher returns from an easy-to-access ISA, which currently pays an average of 0.92% and is at its highest point since September 2019 (when the average rate was 0.93%).

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And if they’re able to lock in their money for a year, they can typically get a rate of 2.29% by taking out the one-year bond, which has hit the highest average rate since November 2012.

Meanwhile the average one-year fixed ISA rate is 1.96% – the highest point since January 2013.

With the recent and expected increase in interest rates by the Bank of England, the choice of savings products is also increasing.

Moneyfacts counted 1,754 savings deals, including Isaus, the highest since the start of the coronavirus pandemic in March 2020, when 1,768 deals were available.

Despite an increase in average savings rates, cash savers will still find their returns wiped out by the impact of rising cost of living, with consumer price index (CPI) inflation reaching 10.1% in the 12 months to July.

However, the increase in savings rates will at least go some way towards offsetting the waning effect of inflation on savers’ cash.

Back-to-back base rate hikes have had a positive impact on variable savings rates

Moneyfacts finance expert Rachel Springall said: “The average one-year fixed bond sector remains extremely competitive, with average returns of 2% for the first time in a decade.

“Product choice across the savings spectrum also improved, approaching levels not seen since March 2020.”

She continued: “Back-to-back base rate increases have had a positive effect on variable savings rates, and have seen the average easy access rate increase to its highest level since 2012, along with notable competition.”

But he added that not every account has improved, so it is important that savers compare their existing accounts and take advantage of the existing competition.

Ms Springall also pointed out that, while some savers may be looking to chase fixed rates in the coming months, others may need the flexibility of being able to withdraw their cash to cover rising living costs.

She added: “To attract savers, providers will need to compete with their peers and respond quickly to offer a range of products tailored to specific needs.”

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