Investment platform Wealthify has teamed up with ClearBank to offer an easy-access savings account that tracks the Bank of England’s (BoE) base rate to help time-poor savers ensure they have a competitive interest rate.
It follows repeated warnings from the Financial Conduct Authority (FCA) that banks and building societies are short-changing savers and paying interest far below the base rate. The BoE recently held rates at 5.25%.
Andy Russell, CEO of Wealthify, said: “In the FCA’s latest savings market review, the average rate paid on instant and easy-access savings accounts was 1.99% - materially below the Bank of England’s base rate.”
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As of today (13 February), the average easy-access savings rate currently stands at 3.17%, according to Moneyfacts.
Find out how much you can earn with Wealthify’s base rate tracker, how it works, and if now is a good time to open a base rate tracker savings account.
How does the Wealthify base rate tracker work?
The rate offered on Wealthify’s easy-access savings account is variable and will change according to the base rate set by the BoE.
The savings rate will always be 0.45% (gross) lower than the base rate. Currently, the Wealthify account is offering 4.91% AER / 4.8% gross.
When the BoE changes the base rate, Wealthify will adjust the rate on its easy-access account to mirror this, minus 0.45%.
The investment platform says it will give savers 14 days' notice if it increases the amount knocked off the base rate (currently 0.45%). But it will give no notice if the margin decreases (which would mean more interest is passed onto the saver).
While Wealthify hosts the savings account on its platform, savers’ money will sit with ClearBank.
How do I open a Wealthify easy-access account?
You can open the account on the Wealthify app or website, and you can start by depositing just £1. As it’s an easy-access account, you have the freedom to access your money when you like.
Plus, there is no limit to how much you can save, although only up to £85,000 is protected by the Financial Services Compensation Scheme (FSCS).
Interest is paid monthly.
How does the account compare to the rest of the savings market?
Right now you can earn up to 5.2% AER on an easy-access savings account.
These attractive rates are mostly owing to challenger banks Cahoot (owned by Santander) and Ulster Bank (a division of NatWest).
| Provider | Rate AER | Minimum deposit |
|---|---|---|
| Cahoot | 5.2% | £1 |
| Ulster Bank | 5.2% | £5,000 |
| Coventry Building Society (BS) Triple Access Saver | 5.15% | £1 |
So, Wealthify’s 4.91% AER offers less than the best easy-access savers on the market right now.
But it still beats inflation which stands at 4%.
Savers need to be more cautious when opting for best-buy easy-access accounts though, as they are notorious for their hidden restrictions.
For example, the Coventry BS 5.15% account limits users to up to three withdrawals per year.
Ulster Bank warns in its small print that if the balance in the account falls below £5,000, the rate you earn will drop to 2.25% AER. Plus, Cahoot’s Sunny Day Saver only permits a maximum balance of £3,000.
“What’s more, we see accounts reverting to derisory interest rates after a bonus rate period finishes, with customers often too busy to continually shop around,” Russell adds.
Are there other base rate savings trackers on the market?
Yes, Wealthify isn’t the only one offering a base rate tracker, but the pool of options is limited with only three on the market (including Wealthify). Here’s how they compare.
| Account | Current rate AER | Margin below the base rate AER | Withdrawals |
|---|---|---|---|
| Wealthify | 4.91% | 0.45% | Unlimited |
| Wombat | 4.91% | Up to 0.5% | One withdrawal per month |
| Co-operative Bank | 2.75% on balances between £10,000-£24,999. 3.25% on balances between £25,000-£49,999 | Balances between £10,000-£24,999 is 2.5% below base rate. Balances between £25,000-£49,999 is 2% below base rate. | Unlimited |
Wealthify seems to be the only ‘true easy-access’ account that offers a competitive rate (Co-operative’s account pays less than 4%).
The others are quite restrictive with the balance amount and the number of withdrawals permitted per year - with Wombat only allowing one per month.
Is now a good time to opt for a base-rate tracker savings account?
Given the Wealthify easy-access account is based on movements in the base rate, it’s worth knowing where interest rates are going.
A base rate tracker savings account would have been a very savvy choice when the BoE was continuously upping the rate from 0.1% to its current 5.25% in the war to bring down inflation.
But since the last hike took place in August 2023 (from 5% to 5.25%), interest rates have been frozen as inflationary pressures eased slightly.
As a result, savings accounts have taken a hit and average rates have been falling since November 2023.
Most experts predict that the MPC will cut interest rates by the summer.
Mark Hicks, head of active savings at Hargreaves Lansdown, said: “In the coming months, there’s a high chance that rates will fall.”
It’s worth highlighting that it’s a close call between fixing your cash and opting for an easy-access account, as you can currently earn up to 5.21% AER on a one-year fixed saver.
“So if you don’t need the cash right now, fixing and guaranteeing the return for a year or more may well prove more rewarding,” Hicks adds.
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