Paragon Bank has hiked the rate on its new double easy-access account for the second time already since its launch on 28 July, from 4.75% AER to a market-leading 5.05% AER.
The account allows savers to withdraw money twice a year, although if a third withdrawal is made, the rate drops to 1.5%.
Paragon joins Shawbrook, Ford Money and Monument Bank in boosting easy access savings rates, just before the Bank of England’s announcement on whether interest rates will go up further.
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The new account has already made its mark in a short space of time, with more than 7,000 new and existing customers having already applied for the saver since its launch.
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The Double Easy Access savings account joins Paragon’s Triple Access account offering 4.55%, which permits up to three withdrawals until the rate is dropped.
Derek Sprawling, Paragon Bank savings director, said: “I am delighted that new and existing customers are taking proactive steps to grow their savings by applying for Paragon’s new Double Access savings account – and that thanks to our newly increased rate, they now have the potential to grow their savings pots even further.”
Even though the saver doesn’t allow unlimited withdrawals, it still gives customers ‘some’ access to their savings, especially at a time when the cost of living is high and inflation takes its toll on household budgets.
“Our Double Access savings account provides savers with not only competitive rates but also the reassurance that they can access their savings at the time of emergency or if they want to make a major purchase,” Sprawling adds.
The rate increase is good news, but how does the Paragon Double Access savings account compare to other easy-access savers on the market?
How does it compare to other easy-access savings accounts?
The Paragon Double Access Savings account tops the easy access savings table with its new 5.05% rate. It is one of two banks that is offering more than 5% on an easy access saver.
The account can be opened with a minimum deposit of £1,000 and you can save up to £500,000. The only catch is, you can only make up to two withdrawals a year to keep the rate.
Otherwise, the rate you earn on your savings will drop to 1.5%.
If you prefer to have full access to the money in your savings, you can still bag a competitive rate.
The top easy-access savings accounts range from a low minimum deposit of just £1 with Ford Money, or you can start saving in the Monument Bank saver with a minimum of £25,000.
It’s worth checking out what rate you could earn on other types of savings accounts. If you’re willing to lock your money away, you could earn a higher return above 6% from a one-year fixed saver or a fixed ISA.
Currently, NS&I offers a market-leading rate of 6.2% on its one-year fixed saver.
Why you need to act fast to bag the 5.05% rate
MoneyWeek has been keeping track of the best savings accounts for some months and has seen top rates drop quickly.
For example, Cynergy Bank hiked the rate on its easy-access online saver from 4.8% to 5% last week, which sat on the top of our Best Buy table. But, a week later the rate dropped down to 4.95%.
High-street giant Santander also pulled its market-leading easy access rate of 5.2% a week before it intended to end, due to high demand for the product.
The FCA pushes banks to offer better savings rates
Following another rise in interest rates, the Financial Conduct Authority (FCA) has warned banks to pass on interest rate rises to savings account rates, otherwise ‘robust’ action will be taken.
This is after the FCA found only 28% of interest rate rises were passed onto easy-access accounts by large banks.
The FCA has already put new Consumer Duty rules into place from 31 July, and it seems some banks are starting to listen.
Santander boosted its rates amid the new FCA rules, and Chase, Starling Bank and Nationwide have followed suit in increasing their rates on savings accounts.
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