The latest news to help you get the most from your savings account.
Here’s my monthly update sharing changes at leading UK savings accounts, as well as some of the articles you might have missed on the blog.
August’s savings update video
August’s savings news
Inflation reaches 9.4%
Once again even if you get the highest interest rate your savings are still losing out compared to inflation. The latest figures show inflation has hit 9.4% – the highest rate in 40 years. Though it’s just a smidgen more than last month’s rate (9.1%), it still means prices are 9.4% more than they were a year ago.
Base rate could go up by 0.5 percentage points
The next Bank of England base rate announcement will be on 4 August 2022 and it’s predicted that there could be a bigger increase than the ones set at the other meetings this year. If it does increase by 0.5 percentage points from 1.25% to 1.75% it’ll be the largest single increase since 1995.
It would be good news for savers, as it’ll likely mean larger increases to interest rates – though the full amount won’t necessarily passed on.
Best buy easy access account now 1.71%
Before we even get there, there’s been a massive hike (comparatively) on easy access savings.
The latest increase from Virgin Money means you can now get 1.71% on your easy access savings up to £25,000. This is on the linked savings account that you automatically get when you open a current account. The increase is 0.16% percentage points, up from 1.56%. Full details here.
The next best easy access is 1.6%, with many more accounts offering 1.5%. It’s hard to say whether any banks will catch up with Virgin Money with their own increases in the next few weeks, but I’d expect to see a few get close to this by the end of the month if we do see the 0.5% base rate rise.
Personally I think there’s enough of a difference to move savings to the Virgin Money account for now and get the rate on offer. Then see what happens.
Time to ditch Premium Bonds
One account I would ditch is Premium Bonds. Though, as reported a few months ago, the prize rate increased from 1% to 1.4%, you’ll probably get less than this in winnings – if anything at all.
And even if you go get 1.4% in prizes, each £10,000 would win you £140 a year. Whereas in the Virgin Money account you’ll get a guaranteed £171.
BUT before you do move the money, wait until 3 August incase you do win in the next prize draw and you can move all the money out.
The only sticking point might be the £25,000 cap with Virgin, though you can get a joint account on top – and it might still be possible to open extra accounts.
And while we’re talking about NS&I, there have been improvements to the rates on offer. You can now get 1.2% in the easy access Direct Saver account – but that’s still well below the competition. The only benefit is you can save up to £2 million pounds with government protection.
Claro to close
One of my best buy savings account picks recently has been the Claro app. Since last October it’s offered 2% on balances up to £3,000 – though only if you have an Apple phone.
Sadly, as of 18 July the company is closing down the consumer facing app – which means the accounts will stop earning you interest and your money will be returned to you.
I’ve written in detail here about what you need to do, and the alternative places for your money. But the good news is you’ll get interest paid for a full 12 months from when you opened the account, based on the balance you had on 15 July 2022.
Nationwide FlexDirect 5% account update
A few people are asking about the £1,000 monthly deposit required with the Nationwide FlexDirect current account for the 5% interest to be paid. Very simply, that money doesn’t need to stay in the account.
You can transfer it in from a different account, and straight back out again, either manually or via a standing order. You can do it in one lump sum of £1,000 or any number of smaller amounts to reach that total.
Or you can use the money already in the account earning interest, and transfer that out and back. Just bear in mind with this method you’ll lose a little interest if it’s gone for more than a day.
Santander 123 increase still not worth it
On a recent live Q&A a viewer asked if the improved savings rate on the fee-paying Santander 123 account made it worth using again (for years I’ve recommended ditching it).
Very simply no. You’ll get 0.75% rather than 0.5% on balances up to £20,000 but have to pay £4 each month. Considering you can get almost 1% more with Virgin Money for free, there’s no point at all paying Santander for their not very good rate.
I would suggest you do consider the 123 Lite current account to earn cashback on your bills. This comes with a £2 monthly fee. Here’s my full review.
Yorkshire Building Society offers loyalty regular saver
If you’ve had a mortgage or savings account with YBS for more than 12 consecutive months then you’ll be eligible for a 5% paying regular saver. You can pay in £500 each month, making it the best account out there.
This isn’t the first time the building society has done this, so it might be worth opening a different savings account now and hoping in 12 months time you’ll get access to a similar deal.
It took me 2 minutes to do this, and I was able to fund the account with £1 via debit card. in hindsight, I should have done £1.01 with my Chase card to get a 99p round up added to the 5% paying Chase pot!
Where to put your savings in August 2022
Make sure you check for updates in my regularly updated savings best buy article, and of course you might have existing accounts closed to new customers with better rates.
Of course you can fix your money for better rates, or if you’re happy to have your money in lots of different places you can mix and match the options. But if you’re looking for relative simplicity right now I’d look at the following easy access accounts:
Best places to save £1,000 to £2,500
The best option for the first £1,500 is the Nationwide FlexDirect current account – if you are eligible. Alongside or instead of this is the Virgin Money M Plus current account.
|£1,500||Nationwide FlexDirect||5%||Can only earn interest on the first £1,500 saved (additional joint account is allowed) and only for one year. Plus you can only get this account once, so if you’ve had it before you won’t be eligible.|
|£1,000||Virgin Money M Plus current account||2.02%||Can only earn interest on the first £1,000 saved (additional joint account is allowed)|
Best places to save more than £1,000 / £2,500
So you’ve filled up Virgin and possibly Nationwide too? The highest place for the rest is the linked Virgin Money, though I’ve shared some alternatives if you have more than an extra £25,000 (Virgin), don’t want to wait for Chase, or don’t want that account.
|Up to £25,000||Virgin Money M Saver||1.71%||Current account required|
|Up to £500,000||Yorkshire Building Society||Up to 1.6%||Online only|
|Up to £100,000||Al Rayan||1.6%||Sharia account / Online only|
|Up to £5m||Nationwide Triple Access||1.5%||Big name but online only|
|Up to £100,000||Tandem||1.35%||Claims to be sustainable / App only|
Best places for ongoing savings
If you are saving money every month then these accounts will beat the above accounts. Read more on regular savers here.
|Max amount saved per month||Account||Rate||Notes|
|£300||First Direct Regular Saver||3.5%||This lasts for 12 months and then closes. Current account required.|
|£150||Natwest Digital Regular Saver||3.3%||Current account required. You can save up to £1,000 and get 3.04% interest. It’s a flexible account so you can take money out and pay it back in. There’s also no set end date like with many regular savers|
|£150||RBS Digital Regular Saver||3.3%||You can have both the RBS and Natwest accounts, though you’ll need a current account with both|
|£200||Nationwide Flex Regular Saver||2.5%||This lasts for 12 months and then closes. Current account required.|
Best places for locking savings away
If you are willing to lock money away for a set time then better rates are available in a fixed bond.
|Length of fix||Account||Rate||Notes|
|Six months||My Community Bank ||2.01%||Credit union|
|Six months||National Bank of Egypt via Raisin||2%||New users might be eligible for a £25 bonus|
|12 months||My Community Bank||2.76%||Credit union|
|12 months||Gatehouse via Raisin||2.75%||New users might be eligible for a £25 bonus|
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