Savings update: Major banks fail to pass on interest rate rise

15 November 2017

Rates are still in a state of flux following this month’s 0.25 percentage point rise in Bank of England base rate to 0.5%.

Some providers have revealed new rates and it has become clear that not all – including Santander, Halifax, Barclays and Lloyds – will pass on the full rate rise to all their savers.

On easy-access accounts Coventry Building Society has announced it will pay 1.1% on its Easy Saver from next month. Tesco Bank will pay 1.35%, including a bonus for the first year.

Paragon Bank is already paying 1.31% on Limited Edition Easy Access 4, launched last Friday. 

The top one-year fixed-rate bond comes from Atom Bank at 1.95% on an account you run on your smartphone or tablet. OakNorth Bank pays 1.87%, while in the high street Kent Reliance pays 1.6% and Skipton Building Society 1.4%. For two years both Axis Bank and Atom Bank pay a top 2.05%.

On tax-free cash Isas, the best easy-access rate comes Coventry Building Society which will raise its rate to 1.3% from the start of next month. Currently, Post Office Money pays a market-leading 1.07%.

The best rate one-year deal is 1.35% from Hodge Bank, Leeds Building Society, Post Office Money and Virgin Money. Charter Savings Bank at 1.72% pays the best two-year rate. 

Savings accounts to beat inflation

To beat inflation compromises need to be made as all of the small number of regular savings accounts that pay more than inflation require savers to have a current account with the provider.

Moneywise keeps tabs on the savings market has found there are accounts that currently beat inflation.

This article was written for our sister magazine Money Observer.

Read more on savings and cash Isas

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