Challenger high-street lender Metro Bank has recently been a big name in the savings market with its top savings rates, as it attempted to come back from its troubles.
Its one-year fixed savings account reached an attractive 5.91% AER in November, but this fell a few times to 5.8% in the same month, to 5.66% in December. In the new year, the bank pulled the deal altogether due to popular demand.
Whilst Metro Bank remained the top-paying easy-access savings account, today (16 January) it has dropped its rate from 5.22% to 4.51% AER.
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Find out what the easy-access savings market looks like now and the top rates you can earn. But you will need to act fast to get the top rates as experts warn they could be pulled at any time.
Metro Bank drops easy-access savings rate
Metro Bank hiked the rate on its instant-access saver on 13 November 2023, from a low of 1.65% to 5.22% AER. But this was a limited edition rate and the bank did warn savers that the product is subject to availability.
It lasted for two months on the market (and no rate changes in between) which is quite impressive, considering we are seeing rates fall daily in the savings market.
The good news is that other easy-access accounts haven’t seen any top deals pulled so far in the new year. Plus, only Charter Savings Bank has dropped the rate on its easy-access saver this year from 5.13% to 5.07%. This then reverted back up to 5.13% days after.
Though MoneyWeek has been tracking easy-access savings rates and found through November and December, four deals were pulled and five lenders dropped their rates.
Still, easy-access savings are dropping at a slower rate than one-year fixed deals, which have already seen 17 providers drop their rates just this month and four deals pulled (including Metro Bank).
Out of the 17 rates that plummeted, 8 deals fell below 5% and one savings account now stands in the 3% region- a sign that the top savings rates are falling.
And just today, the top-paying one-year fixed deal by Al Rayan Bank dropped in rate from 5.5% to 5.3%.
Myron Jobson, Senior Personal Finance Analyst, interactive investor, warns: “The top savings deals continue to drop like flies, on expectation that interest rates will fall quicker than initial predictions.
“As such, those who have been waiting to nab a top savings deal might want to get a move on as the very best deals may not be around for much longer.”
The savings market right now
With Metro Bank pulling its top 5.22% rate on its easy-access account, here are the top rates you can earn now.
- Earn 5.2% AER with Cahoot’s Sunny Day Saver. Open online with just £1.
- Ulster Bank also offers 5.2% AER on its loyalty saver (open to new and existing customers). Open online with £5,000.
- Earn 5.13% AER with Charter Savings Bank. Open online with £5,000.
Even though Cahoot takes the top spot, you can only earn 5.2% on balances up to £3,000. No interest is earned on balances between £3,001 and £2million.
When shopping for an easy-access saver, do look out for the hidden restrictions that come with the account. For example, with Ulster Bank, if your balance drops below £5,000, the rate you earn drops to 2.25%.
The same goes with Charter Savings Bank- any balances below £5,000 will earn a rate of 0.1%.
One-year fixed savings
Historically, if you fix your cash, you’re likely to earn a better rate, and the rate is fixed, giving you certainty on the interest you earn. Here are the top rates right now.
- Earn 5.3% with Al Rayan Bank. Open online with £5,000. As this is a Sharia-compliant bank, you earn an expected profit rate.
- Investec Bank also offers 5.3% AER. Open online with £5,000.
- Earn 5.27% AER with SmartSave. Open online with £10,000.
All of these accounts have a high minimum deposit. If you’re looking for something lower, your next best options are Cahoot or Ford Money’s one-year fixed accounts, which both offer 5% and can be opened with £500.
Even though you can earn more on an easy-access account, the 5% rate would be fixed. Whereas the variable rates on easy-access accounts mean banks could drop their rates depending on market movement and if interest rates fall.
With millions of people set to pay tax on their savings due to high interest rates, check our best cash ISA guide to shield your cash from the taxman.
Vaishali graduated in journalism from Leeds University and she has experience working with the likes of Leicester Mercury, Inews and The Week. She also comes from a marketing background, where she has done copywriting and content creation for businesses.
Currently writing about all things personal finance, Vaishali is passionate about finding the best deals around, whether it's the best credit cards or the cheapest personal loans, as well as sharing top money hacks to help people save and better manage their money.
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