Savings rates have fallen to their lowest level on record, making it more important than ever for savers to seek out the best possible returns.


The average rate on easy access accounts is now just 0.22%%, according to research by financial website, down from 0.56% in March this year. Average rates on tax-efficient easy access cash individual savings accounts (ISAs) have also fallen sharply in recent months, from 0.83% in March to 0.32% in August.

“As the UK enters a recession for the first time in 11 years, consumers may be looking to put aside some cash for an emergency fund in response,” said Rachel Springall, finance expert at “Since the UK lockdown, savings rates have plummeted to record lows across the board, so prospective savers may be disheartened with the current rates on offer.

“The impact of the Coronavirus pandemic and subsequent base rate cuts has caused a rate-cutting trend among savings providers and while this is expected to slow down, there are few signs of the market making a U-turn any time soon.”

Glimmer of hope
However, it’s not all doom and gloom for savers, with some providers launching new accounts in recent weeks. For example, OakNorth Bank has introduced a competitive one-year fixed rate bond paying 1.21% gross interest on a minimum balance of just £1. It also offers two, three and four-year fixed rate bonds paying 1.30% 1.32% and 1.33% respectively. Bear in mind that fixed rate savings accounts do not usually allow withdrawals, so you’ll need to be happy to tie your money up for the full term of the bond.

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If you’re trying to get into the savings habit, some of the highest interest-paying accounts are regular savings accounts, where you commit to paying in a set amount every month for a year, typically between £25 and £300. Coventry Building Society’s Regular Saver account, for example, pays 1.85% gross interest a year and can be opened with £1. The maximum you can pay in each month is £500.Similarly, Principality Building Society’s Regular Saver Bond Issue 2 pays 1.50% gross interest a year. You must pay a minimum of £20 a month into this account, and the maximum monthly payment you can make is capped at £250.

If you need easy access to your savings, NS&I’s Income Bonds currently pay the highest returns, offering 1,16% gross interest a year on a minimum balance of £500. You can make withdrawals from the bonds whenever you like, and interest is paid on the 5th of each month.


Even if savings returns are currently low, it’s still vital to have cash savings to fall back on should you need them. Olivia Kennedy, financial planner at wealth managers Quilter, said: “Having a cash savings buffer is important. Even though the returns are distinctly underwhelming, having some cash in reserve is critical. It provides a backstop if you find yourself in financial difficulty. That buffer could be the difference between getting through a period of financial strain or falling into debt.”

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