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.
July’s savings update video
July’s savings news
Savers have less than £500 in their accounts
The head of Lloyds Bank told the BBC that 80% of Lloyds customers have less than £500 in their current and savings accounts held with the bank.
Yes, obviously many people will have moved savings elsewhere in search of better rates (Lloyds is average on the best accounts, poor on most), but it does show that the cost of living crisis is eating into reserves.
That’s something backed up in a report from Hargreaves Lansdown which found 41% of households have used savings or borrowed money to cover costs. The investment firm added that in the next year most buffers built up during the pandemic will be wiped out.
Dwindling savings might make you borrow rather than eat them all up. But unless you borrow at 0%, it’s still far better to use savings first along with trying to cut back and spend less. Then only borrow if there’s an emergency or no other choice.
Nationwide brings back 5% interest to FlexDirect account
Lots to report from Nationwide this month. The big news was the increase from 2% to 5% on the Nationwide FlexDirect current account. However, this only applies to new account holders who’ve not had the account before, and only on the first £1,500 saved. You also need to pay in £1,000 each month, but that money doesn’t need to stay in the account. Here’s my detailed analysis.
Elsewhere Nationwide relaunched the Start to Save regular saver account. You can only save up to £50 a month but you’ll get 2.5% interest, and the chance to win a £200 prize every six months. Here’s how it works and whether I think it’s worth it.
Finally, the building society has just hiked the triple access saver to 1.4%. So if you want a well-known bank and have more than the £25,000 you can save with Virgin Money, this isn’t a bad option. As the name suggests you can only make three withdrawals a year before the rate drops to 0.1%. This can only be opened and managed online.
1-year fixes pass 2.7%
The best buy one-year fix is currently 2.72%, from Cynergy Bank, and until recently National Bank of Egypt offered 2.7% via Raisin. That’s 1.16% better than the best easy-access account.
Presuming the Bank of England does increase the base rate further this year and next you’d expect both rates to increase more, but you might decide you’re happy to lock in now at the higher rate. The best six-month fix is 2.01% at BLME via Hargreaves Lansdown.
Virgin Money loophole?
When Virgin Money first hiked rates on it’s linked M Saver account, it also changed the terms and conditions to say you can only open one solo and one joint M Plus current account. Previously you could apply for an unlimited number (though not necessarily get accepted).
However, over in my Facebook community, follower Craig shared how he’s just opened his 30th account. I thought I’d try it myself and I was also able to open an additional account (bringing my total to three).
So does this mean the new rule has ended, or is this a loophole? Well the terms and conditions say the following:
From 18 February 2022, you are only able to open 1 of these accounts in your own name. Accounts opened in your own name after this date that take you over this maximum number will have to be closed.
If we close your account, we’ll return any money due to you. Any accounts already opened before this date will remain unchanged even if you exceed the maximum now allowed.
So though it’s still possible to open extra accounts, it doesn’t mean you’ll be able to keep them. I’ll keep an eye on what happens and update you if anything changes.
Santander opens up regular savers
Santander’s 2.5% paying regular saver was limited to 123 current account customers at launch, but has now been opened up to all Santander current account holders. It’s not a bad option, though First Direct (3.5%) and Natwest/RBS (3.3%) pay more, while Nationwide’s 2.5% account allows larger monthly deposits.
Marcus increase requires activation
Marcus recently increased the easy access rate on accounts to 1.3%. That’s still well below the best buys, so you’re better off moving your money elsewhere.
However if you want to stay put you won’t automatically get this higher savings rate. Instead you need to go into your account and activate it. My video from last July shows how to do this.
Green Bonds were a flop
Last October the NS&I Green Bonds were launched, but any hope these could be a way to save ethically while getting a good rate were quickly dashed when the rate was revealed. Just 0.65% for a three year fix. Easily beaten at the time. Even the increased rate of 1.3% in February was rubbish.
I obviously wasn’t a fan, and suggested you all look elsewhere. Which is what most people seem to have done. Overall the bonds raised £288 million.
Inflation reaches 9.1%
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 9.1% – the highest rate in 40 years. Though it’s just a smidgen more than last month’s rate (9%), it still means prices are 9.1% more than they were a year ago.
The next announcement will be in a few weeks, while the Bank of England base rate announcement will be on 4 August 2022.
RCI: Get £25 bonus with savings account
Savings provider RCI is offering new or existing customers a £25 bonus if you can prove you’re stuck in the waiting room for a Chase current account (technically it’s any bank, but only Chase really had this problem recently).
Since it seems like Chase’s waiting room isn’t currently in operation it might be this deal is unobtainable! But if you are eligible you need to:
- Open an RCI fixed term account or 95-day notice account via this link
- Deposit at least £10,000
- Send an email to [email protected] with the subject “We’re stuck” and a screenshot proving you’re in the Chase waiting room
Personally I’d only go for the 95-day notice account (currently paying 1.55% AER variable), so you have the flexibility to move your money again if rates improve elsewhere. So you’ll want to offer notice soon after opening the account. Ends 31 July 2022. Full terms and conditions here.
Where to put your savings in July 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 up to £1,500
The best option for the first £1,500 is the Nationwide FlexDirect current account – if you are eligible.
|£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.|
Best places to save up to £4,000 / £5,500
The best option after this, or if you aren’t eligible for Natiownide, is Virgin Money. Save up to £1,000 here for 2.02%. The next £3k is with the Claro app, but this is just for Apple devices.
|£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)|
|£3,000||Claro app||2%||Only via the Claro app|
Best places to save more than £4,000 / £5,500
So you’ve filled up Virgin and possibly Claro too? The highest place for the rest is the linked Virgin Money or the Chase account, 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||1.56%||Current account required|
|Up to £250,000||Chase Bank||1.5%||Smartphone required|
|Up to £1m||Cynergy||1.46%|
|Up to £5m||Nationwide Triple Access||1.4%||Online only|
|Up to £100,000||Tandem||1.35%||Claims to be sustainable / App only|
|Up to £100,000||Al Rayan||1.45%||Sharia account / Online 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.|
Listen to Cash Chats, Andy’s twice-weekly podcast. Episodes every Tuesday and Friday.