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.
May’s savings update video
May’s savings news
Interest rates sneak up again, but they’re still well below inflation
Another month, another Bank of England base rate increase, rising to 1%. That’s an increase of 0.25 percentage points, and a total of 0.9% up since early December. There’s yet to me much movement on savings accounts as a result, but it’s only been a few days since the announcement.
But despite this, your savings are still losing out compared to inflation. The latest figures show inflation has hit 7%, and could go above 10% later in the year.
First Direct now offers the best regular saver at 3.5%
I wrote last month about regular savers, and whether they were worth it when the amount you can save in them and the rates on offer were relatively low. Well, since then First Direct has increased the rate on offer from 1% to 3.5%, and you can save up to £300 a month, so it’s worth a look if you have a current account with them (there’s a switching offer of £150 if you don’t).
Signup bonuses disappear
Bad news came though as the handful of offers to open a new savings account were either axed or reduced.
First, Virgin Money changed its current account switching offer so you no longer get 5.02% (3% more than the usual 2.02%) on £1,000 of savings. Instead you’ll earn 20,000 Virgin points (more here on the offer).
Next, Chip stopped offering £20 for signing up to the app, and I don’t think it’s going to return any time soon (if at all) as the company is going to focus on investing incentives. However, I still think it’s worth giving it a go as you’ll get 1% back on auto-savings.
And finally Raisin ended the £30 bonus customers could get for joining and opening a linked savings account with £10,000 saved. It has been replaced by a £25 offer, which is better than nothing. But only the long-term fixes will beat Chase’s 1.5% rate, even with this bonus added in.
Chase still leads the pack on easy-access
The new savings account from Chase is still the top-paying easy-access account on large balances (more here on how it works), but it’s forced other banks to increase their rates in an attempt to catch up. Even so the next best is 1.3% via Gatehouse, then Atom offering 1.25%.
However, you can still beat all of these with Virgin Money’s M Plus Current Account on balances up to £1,000 as you’ll get a higher 2.02%. And iPhone users might also want to look at Claro’s app (2% on up to £3,000).
Ethical and practical alternatives to Chase
As I wrote about recently when comparing Chase with Monzo and Starling, the bank requires your smartphone to be operating relatively recent operating systems. This has meant not everyone has been able to open up an account.
The next best rate that doesn’t require an app and can be opened with a web browser is from Aldermore, paying 1.25%. However, this is a double access account, and the rate plummets if you make more than two withdrawals in a year.
The other issue some have with Chase, including myself, is that its parent bank JPMorgan Chase is the world’s largest investor in fossil fuel. Not only that but Ethical Consumer magazine pointx out it has also been linked to investments in things like cluster bombs and Amazon fires while profiting massively from debts held by third world countries. It gives the bank a score of 3 our of 20. Not great.
Personally I don’t want my oney being used for these things. So I won’t be saving with Chase. Of course, all the big banks are doing similar things, with First Direct / HSBC scoring 2/20, Natwest getting 3/20 and Santander marked at 3.5/20. These banks all offer the best regular savings rates, so are ones to avoid too.
I’ve listed some ethical account alternatives below and in my savings best buy tables.
Where to put your savings in May 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 £4,000
The best option for the first £1k is Virgin Money as it is truly easy access. The next £3k is with the Claro app, but this is just for Apple devices.
This combination gets you the highest interest rates and some extra freebies.
|£1,000||Virgin Money M Plus current account||2.02% (5.02% if switch to Virgin)||Can only earn interest on the first £1,000 saved (additional joint account is allowed)|
|£3,000||Claro app||2%||Only via Claro app|
Best places to save more than £4,000
So you’ve filled up Virgin and possibly Claro too? The highest place for the rest is Chase, though I’ve shared some alternatives if you can’t get (it only works on recent phones) or don’t want that account.
|Up to £250,000||Chase Bank||1.5%||Smartphone required|
|Up to £1m||Aldermore||1.25%||Double access only, can be opened online|
|Up to £100,000||Tandem||1.1%||Claims to be sustainable|
|More than £25,000||Ecology Building Society||1.05%||90-day notice account|
|Up to £100,000||Gatehouse||1.3%||Sharia account|
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.