Lloyds, Santander and HSBC hike savings rates

Nationwide, Santander and HSBC are among the larger banks and building societies that have hiked the rates on their savings accounts throughout August. 

This follows the Bank of England upping the base rate to 5.25%,- the 14th consecutive rise.

The push for better savings rates comes from the regulator Financial Conduct Authority (FCA) that found the largest savings providers had only passed 28% of interest rate rises onto their easy-access accounts. Savers with one-year fixed savings accounts fared better – around half of the rate increases were passed on. 

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As a result, the FCA will review the savings rates that banks are offering every time there is a base rate change and prompt them to increase their rates. The FCA has warned that "robust action" will be taken against banking giants if rates do not get passed on. 

Some smaller providers have followed suit and raised their savings rates, with Chase and Starling increasing the offering on their savings accounts. 

Here’s a full round-up of all the providers, big and small, that have recently upped their savings rates and how they compare to the rest of the market. 

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Savings rates changes – large savings providers

If you’re looking for a good return on your savings, these are the banks that have hiked their rates on their easy access and one-year fixed products.  

• HSBC - new savings rates are live. There's no rate change on their one-year fixed bond. 
• Lloyds - New rates are live. 
• Nationwide - is offering the most attractive increase on its saving products, with a 0.75% hike on its One-year Triple Access Online Saver. The large building society will hike its rates for the fifth time this year on various savings products between 16 August and 1 September. 
• Santander has responded to the base rate hike by raising only two of its savings products this time, on its Good for Life ISA and Rate for Life savings account. The new rates are live. There's no rate change on their one-year fixed bond. 
• Barclays told MoneyWeek that they plan to raise rates on a variety of its saving products, including fixed bonds and ISAs between 15 August and 1 September. But no details have been given on new rates.

One takeaway from this round-up is that all five banks have raised or will raise the rate on their easy access savings offering. But there’s a catch. Natwest and Lloyds are offering different rates depending on your balance. 

Although rates go up to 3.3% with the Natwest Instant Saver, that’s only if you save more than £250,000. If your bank balance is less than £24,999, the rate drops to 1.75%, which only equates to a third of the Bank of England’s base rate. 

Savings rates changes – smaller savings providers

Here’s what some of the smaller bank providers are doing with their easy access and one-year fixed savings accounts. 

• Starling Bank - has hiked the rate on its one-year fixed savings account from 3.25% AER to 5.25% AER 
• Chase - the rate for Chase's easy-access savings account has increased from 4.07% AER to 4.1% AER
• Shawbrook Bank - has upped the rate of its easy access savings account to 4.93% AER and its easy access ISA to 4.43% AER
• Paragon Bank -  the new double easy-access account (which is limited to two withdrawals per year) is now 4.75% AER. If a third withdrawal is made, the rate drops to 1.5%.

It’s evident that the smaller banks are offering much better rates on their savings products compared to larger banks, with the best savings rates averaging around 4% to 5%.

How do the latest bank rate hikes compare to the rest of the market?

While the recent rate increases from banks are welcome, how do their savings accounts compare to savings rates overall? 

Easy-access savings top rates

• At the time of writing, Shawbrook's easy access account has a top rate of 4.93% AER. it can be opened with a £1,000 deposit. 
• If you’re on the search for an even lower starting deposit, you can start saving in the Chip Instant Access account* with just £1. With that account, you can earn 4.84% AER on your savings, plus unlimited withdrawals.
• Monument Bank's easy-access savings account is offering a return of 4.81% AER. But, to get that rate you'll need a minimum deposit of £250,000.

One-year fixed savings accounts

If you're willing to lock your money away for a year, the best one-year fixed savings accounts are offering rates on the 6% mark.

• Investec Bank tops the table with 6% AER but the account requires a hefty minimum deposit of £5,000
• Kent Reliance is offering a rate of 5.98% AER on its one-year bond, and you can open the account with £1,000
• Charter Savings Bank also lets you earn 5.98% AER on your savings, but the account requires a minimum deposit of £5,000

The big advice when it comes to bagging a good rate with a smaller bank is, their rates change daily. So you have to act quickly if you like the look of one. 

If you’re keen on stashing your cash away tax-free, it's worth considering a fixed-rate ISA which is offering similar rates.