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.
Mid-December’s savings update video
Mid-December’s savings news
Base rate increases to 3.5% while inflation drops to 10.7%
As predicted there’s been another increase to the base rate as set by the Bank of England. It now sits at 3.5%, meaning a jump of 3.4% over the last year. Meanwhile inflation has dropped to 10.7%, but that’s still very high. Here’s my full analysis, along with details of what the Bank of England expects to happen to both in 2023.
Easy, limited and notice access rates edge up
Following the base rate announcement, a handful of accounts announced increases to their rates either now or in the new year. For easy and limited access accounts these include:
- Coventry Building Society: 3.25% from 6 January (max six withdrawals a year)
- Chip: 3% (though read my analysis as there are some key differences to normal savings accounts)
- Yorkshire Building Society: 3% on up to £5,000, then 2.5% (max two withdrawals a year)
- Zopa: 2.86%, with gradual increases for sub-accounts where 7 to 90 days notice is required
- Chase: 2.7% from 4 January 2023
There have also been some boosts for notice accounts, which might be worth a look:
- Oak North: 3.35% for 120 days notice
- Zopa: 3.26% for 90 days notice
- Zopa: 3.06% for 31 days notice
This could well change again in the coming days if other providers follow suit, so check out my best buys guide for updates.
Premium Bonds increase to 3% prize rate
Just before the base rate hike, NS&I revealed that Premium Bonds will have a prize rate of 3% from January 2023. However, the other increases above, with more likely to follow, mean it’s still lagging behind guaranteed rates elsewhere. Here’s more on the Premium Bond change, and why it doesn’t mean you’ll get a 3% return.
Cash ISA hits 4%
There’s been a big move on ISAs from Barclays, as you can get a fixed rate account paying 4% for one year, plus you can make three withdrawals a year. Transfers in are allowed, and it’s also flexible – so if you do take money out, you can put it back in.
Fixed rates continue to fall
In my update at the start of the month I reported how fixed rates were falling after long-term base rate predictions dropped from above 6% to around 4.5%. And that’s continued for most accounts, with the best one-year fix now down to 4.27%.
The only exception is a 4% nine-month fix from Shawbrook, a full 0.25% up on the next best rate.
Broadly it does still feel like if you want to fix for a year, there’s no point waiting for those rates to improve. You just need to be happy with the knowledge that things could go up or down again next year. Make sure you keep an eye on my best buy list of all the options.
First Direct pauses new applications
If you’re after a First Direct current account in order to get the 7% regular saver, you’ll probably have to wait until January. Applications for the bank account have been paused until early next year. Or in theory they have – the FD website seems to be allowing them once again!
Existing First Direct customers shouldn’t be impacted by this if they want the regular saver. You can apply via your app.
If you are going to open the full current account (now or next year), make sure you get the £175 switch bonus too. All the details on the offer here.
Where to put your savings in December 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 £5,000
The best option for the first £5,000 is the Barclays Blue Rewards Rainy Day Saver via a current account.
|£5,000||Barclays Blue Rewards Rainy Day Saver||5.12%||Can only earn interest on the first £5,000 saved and requires two direct debits a month to cancel out a £5 monthly fee|
Best places to save between £5,000 and £9,000 (possibly up to £17,000)
Next up I’d look to put additional income into the Santander Edge saver. There’s also the potential to open an extra Edge account as a joint account and get two more Edge savers with this. However the monthly fee will impact your interest so you’ll want at least £3,600 in accounts where this charge isn’t covered by cashback on bills.
|Up to £4,000||Santander Edge Saver||4%||Assumes £3 fee is cancelled out by cashback on bills|
|Up to £8,000||Two Santander Edge Saver (via joint account)||Up to 3.55%||Opening an additional joint Edge current account means you can get two Edge Savers.|
Best places to save more than £9,000 / £17,000
If you can’t do all or some of the Edge options, or for money after this then the highest place for the rest is HSBC’s limited access account at 3% or Virgin Money’s 3% ISA.
Beyond this are easy-access accounts without upper limits from Al Rayan and Tandem.
|Up to £20,000 (more if transferred)||Barclays ISA||4%||Requires a current account|
|Up to £250,000||Coventry Building Society||3.25%||Only six withdrawals a year|
|Up to £250,000||Chip||3%||App only, bonus not protected, bonus doesn’t compound (more here)|
|Up to £85,000||Zopa||2.86%||App only|
Best places for ongoing savings
If you are saving money every month then these accounts will beat the above accounts. You could also drip feed from easy-access accounts to boost existing savings. Read more on regular savers here.
|Max amount saved per month||Account||Rate||Notes||Max annual interest|
|£300||First Direct Regular Saver||7%||Current account required||£135|
|£400||Club Lloyds Regular Saver||5.25%||Current account required. Full review here.||£135|
|£150||Natwest Digital Regular Saver||5.12%||Current account required. You can save up to £5,000 and get 5.12% 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||£50|
|£150||RBS Digital Regular Saver||5.12%||You can have both the RBS and Natwest accounts, though you’ll need a current account with both||£50|
|£250||HSBC Regular Saver||5%||Current account required||£81|
|£250||Halifax Regular Saver||4.5%||£73|
|£250||Lloyds Regular saver||4.5%||Current account required.||£73|
|£250||Bank of Scotland Regular Saver||4.5%||Current account required.||£73|
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|
|12 months||My Community Finance||4.27%|
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