Great rates for new savers, but existing account holders need to be alert to falling rates

21st July 2015 by Anna Bowes

This week providers have been taking with one hand and giving with the other. The positive news for savers keeps coming as yet more best buy accounts hit the market and the Savings Champion Index saw its largest weekly increase since April 2013. However, this news has been tempered by the continuing slashing of rates, affecting existing account holders.

The Savings Champion Index (see below for details) is now at its highest level since February 2014, having increased for the fourth week in a row. This week we have also seen the highest weekly upturn in the index in over two years, as a result of two new best buys launched in the last week. BM Savings launched a new version of its Online Extra account (1.60%), which actually replaced the previous version (1.50%) as the market leading easy access account. Added to this, Virgin Money released a new version of its Defined Access Saver (1.51%), also paying a higher rate than the previous version, which was in the top five accounts on the market.

Away from easy access accounts, there was more good news for savers looking to open a new account as Paragon Bank launched a new version of its 1 year fixed rate bond (2.07%), which is now the market leader. The provider also launched a new version of its 120 day notice account (1.96%), which beat the nearest equivalent by the smallest of margins and is now topped only by Secure Trust Bank, offering 2.05% with a significantly longer notice period of 183 days.

Also this week we saw a joint market leading 2 year fixed rate ISA launched by Halifax (2.00%), an unusual move from a high street provider and a first return to the ISA best buy tables since September 2014. We have also seen increased fixed rate bonds launched by United Bank Ltd, Aldermore and from the high street, Halifax and Lloyds Bank.

All of this is great news for savers looking for a new home for their money and it is just as well, as there is no let up to the number of rates being cut for existing account holders. With a week still to go, July has already seen the second highest number of accounts cut in 2015 and the fourth highest since the cuts started, following the introduction of the Funding for Lending Scheme back in August 2012. Rate cuts have hit almost 3,500 since August 2012, with few existing savers immune from seeing their rates reduced.

Switching out of poor paying accounts has become more important than ever, but at least there are positive signs in the savings market, with a group of providers competing hard for savers’ money. Long may this competition continue.

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