logo
Why high street banks may not be the best place for your regular savings

Why high street banks may not be the best place for your regular savings

Sky News21-05-2025
Why you can trust Sky News
Several banks have announced rate reductions on their savings accounts since 8 May when the Bank of England cut the base rate to 4.25%.
HSBC, for example, will cut the rate on its flexible saver account from 1.35% to 1.30% AER on 21 July, while Barclays will cut the rate on its everyday saver from 1.16% to 1.11% AER on 4 August.
It's not only high-street providers that have cut rates. At the beginning of the year, before the Bank of England made its first rate cut in February, the top unrestricted easy access account available was with Gatehouse Bank and was paying 4.75%.
Today, after two base rate cuts amounting to 0.5%, this account is now paying 4.15% - so has fallen at the same rate.
"The difference, of course, is that the Gatehouse account is still fairly competitive - paying just a little less than base rate - and importantly more than CPI inflation," says Bowes.
So, although high street banks are cutting rates by a smaller amount, they are still very uncompetitive.
For those who are willing to shop around, there are still good rates to be found, with the top easy access accounts changing very little since January.
"At the beginning of the year, the average of the top five easy access accounts was 4.79% - at the time of writing it's 4.66% with the top rate from Chip paying 4.77% AER," Bowes adds.
"So, for those with cash in their high street bank's easy access account, don't wait for the rates to be cut - you are likely to already be getting a raw deal, so switch today to get your cash working harder."
And for a £50,000 balance...
Taking a wider look at the savings market, we saw the average rate for one-year and two-year bonds fall slightly.
But those willing to lock their cash away for three or five years could benefit more as the average rates on these accounts increased.
"This now means that the rates for all terms are very similar, which could mean that locking in for the longer term is more appealing to those people who were put off by the fact that the rates were much lower in the past," Bowes says.
"Of course, there is a possibility that with inflation expected to increase again, certainly in the short term, further rate cuts may not happen immediately, but the trajectory is still downwards.
"Therefore, if you're locking some of your cash up for the long-term you might be pleased you have done so in one or two years' time when your bond comes up from maturity, if the rates available then are lower."
Here's a look at the best rates available...
We saw similar movement in fixed-rate ISAs, which have been very resistant to the recent base rate cut.
The top one-year rate is slightly higher than it was a week ago, as is the five-year rate.
"Remember, although the ISA rates look like they're lower than that of the equivalent fixed-term bonds, after tax is deducted from the bond often a cash ISA will provide a better return to those people who are paying tax on their savings now," Bowes points out.
"Of course, it's also important to shop around to earn as much interest as you can."
Here's a look at the best rates available...
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

US and EU clinch trade deal to avert prohibitive US tariffs, Trump says
US and EU clinch trade deal to avert prohibitive US tariffs, Trump says

Reuters

time28 minutes ago

  • Reuters

US and EU clinch trade deal to avert prohibitive US tariffs, Trump says

TURNBERRY, Scotland, July 27 (Reuters) - The United States has struck a framework trade deal with Europe, U.S. President Donald Trump announced on Sunday, averting a spiralling row between two allies who account for almost a third of global trade. The deal, that includes a 15% tariff on EU goods entering the U.S. and significant EU purchases of U.S. energy and military equipment, will bring welcome clarity for EU companies. However, the baseline tariff of 15% will be seen by many in Europe as a poor outcome compared to the initial European ambition of a zero-for-zero tariff deal, although it is better than the threatened 30% rate. The announcement came after European Commission President Ursula von der Leyen travelled to Scotland for talks with U.S. President Donald Trump to push a hard-fought deal over the line. Trump, who is seeking to reorder the global economy and reduce decades-old U.S. trade deficits, has so far reeled in agreements with Britain, Japan, Indonesia and Vietnam, although his administration has failed to deliver on a promise of "90 deals in 90 days." Trump has periodically railed against the European Union saying it was "formed to screw the United States" on trade. His main bugbear is the U.S. merchandise trade deficit with the EU, which in 2024 reached $235 billion, according to U.S. Census Bureau data. The EU points to the U.S. surplus in services, which it says partially redresses the balance.

UK could save £5bn if Bailey changes course on debt sales
UK could save £5bn if Bailey changes course on debt sales

Telegraph

time29 minutes ago

  • Telegraph

UK could save £5bn if Bailey changes course on debt sales

Taxpayers would save up to £5bn next year if Andrew Bailey overhauls the Bank of England's controversial programme of bond sales, analysts have calculated. Deutsche Bank has said Rachel Reeves would be spared from transferring billions of pounds to Threadneedle Street if it stopped selling long-term debt amid a dramatic drop in bond prices. The Bank is currently unwinding the stockpile of gilts it amassed during the financial crisis and lockdown, when it created almost £900bn to boost the economy. When interest rates were at record lows of 0.1pc during the pandemic, the Bank earned far more on its returns from government bonds than it had to pay in interest to commercial banks. However, this reversed dramatically once interest rates started to rise. The Bank is now also actively selling gilts back to the market as part of so-called quantitative tightening (QT), crystallising billions of pounds of losses for the taxpayer.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store