UK savers content with cash deposits despite rate cuts
Easy access and notice accounts may well be ideal savings vehicles for those who have spare cash to put aside, particularly those who are not confident to invest in more risky ventures.
The latest analysis from Moneyfacts.co.uk reveals that some notable easy access and notice accounts have faced cuts recently and why savers may wish to act sooner than later to secure a top rate. Easy access remains the more popular option, but if providers are flooded with cash, rates could fall further.
Over the past month, several top rate deals have been cut on both easy access and notice accounts – cuts of 0.20 per cent in some cases – at a time when these types of savings vehicles could be in demand.
Easy access remains a firm favourite among savers, as balances now account for 58.7 per cent of the savings market (excluding current accounts), up from 55.6 per cent last January, according to data from CACI analysed by Paragon Bank. The same study showed that easy access average balances grew from GBP10,132 last January to over GBP11,000.
Despite a low interest rate environment, a study from Wealthify suggested 43 per cent of consumers are happy with how their cash savings perform and one in three (38 per cent) were not confident with investing, as many continue to turn to cash savings instead.
Rachel Springall, Finance Expert at Moneyfacts.co.uk, says: “There may well be many accidental savers out there who are not prepared to take the risk to invest their cash and instead turn to a simple savings account, however it’s important these savers don’t debate the top rate deals for too long. It’s also wise for savers to think about whether they need quick access or could give notice for a higher return, as there are many notice accounts worth considering.
“Easy access accounts continue to be popular, but savers could get a better return if they are prepared to leave their pot for a few months. The top rate is 0.65 per cent from Moneycorp Bank on its 90 Day Notice Account, which is 0.20 per cent more than the easy access account from Kent Reliance at 0.45 per cent, the top rate that allows multiple withdrawals and has no restrictions. These are both great deals to consider but there is no guarantee they will last for long, especially with recent weeks’ cuts on other deals indicating volatility.
“One way for providers to cope with demand is to cut rates or remove the product from sale entirely. As it stands, many of the top deals in the easy access arena are restrictive in some way or impose withdrawal restrictions. Therefore, if savers are seriously considering these deals, then notice accounts should not be overlooked, so long as careful planning to access funds is put in place.
“As we would expect to see, last month brought relaunches of some ISAs, but this was relatively overshadowed by the continued volatility seen across easy access and notice accounts outside of the wrapper. Indeed, out of the new launches or improvements, there were no deals to take a market-leading position whatsoever, with providers clearly taking a more cautious approach with their offerings, in perhaps a more sustainable position in the market. As always, it’s vital savers act quickly to secure a top rate deal and review any existing accounts too.”