Now is the time to move your money and grab one of the best savings accounts, as average rates hit a 15-year high, according to Moneyfacts.
Currently, easy-access savings accounts are topping 5%, with Paragon Bank offering 5.05% AER on its Double Access Saver.
However, although rates on easy-access accounts have picked up in the past few weeks, it still doesn’t match the 5.25% base rate set by the Bank of England (BoE).
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The closest was Santander’s easy-access savings account offering 5.2% - but this rate was pulled last week.
Now, investment site Wombat, which launched in 2019, has partnered with GB Bank to offer savers a new base rate tracker easy-access savings account, meaning the rate will change based on the interest rate set by the BoE.
Kane Harrison, CEO and co-founder of Wombat, said: “This is a game-changing new product for savers as it offers a highly competitive interest rate and eliminates the hassle of constantly moving your money around to chase competitive rates.”
We look at how the Wombat base rate tracker works, and how it compares to the rest of the market.
How does the Wombat base rate tracker work?
The rate on the Wombat account changes according to the base rate set by the BoE.
The interest rate will always be 0.5 percentage points lower than the base rate. So right now it is paying 4.75% - based on the current 5.25% base rate.
If the BoE changes the base rate, the savings rate on the Wombat account is adjusted the following day.
How do I open a Wombat easy access account?
The account is free to open via Wombat’s mobile app. You need to deposit a minimum of £500, and you can save up to £250,000. Bear in mind that as with all savings accounts, the Financial Services Compensation Scheme only protects a maximum of £85,000 should things go wrong.
Customers are restricted to one withdrawal per month. Any money put into the account is held with GB Bank, a fully regulated and authorised UK bank. Interest is paid daily.
How does the rate compare with other savings accounts on the market?
Currently, three banks offer more than 5% on an easy-access account. Here are the best easy-access accounts on the market right now.
| Account | Rate AER | Minimum deposit | Withdrawals |
|---|---|---|---|
| Paragon Double Access Savings Account | 5.05% | £1,000 | Two withdrawals per year |
| Shawbrook Easy Access Account | 5.02% | £1,000 | Unlimited withdrawals |
| Monument Bank Easy Access Account | 5.01% | £25,000 | Unlimited withdrawals |
| Secure Trust Bank Access Account | 4.98% | £1,000 | Unlimited withdrawals |
| Ford Money Flexible Saver | 4.95% | £1 | Unlimited withdrawals |
So, the new Wombat account still sits below the top-paying easy-access accounts.
But, Harrison says: “Providers are incentivising customers with high promotional rates only to withdraw them days later, without notice, or offering bonus rates that are paid only if you leave your money deposited for 12 months.
“We are giving everyday savers certainty that they are continuously receiving near top-of-market rates as well as easy access to their cash when they need it.”
If you’re someone who wants to put your money into an account and not have to worry about continuously checking and switching to get the best rate, this new Wombat account could be ideal.
If you’re looking for unlimited withdrawals - the top easy-access rate from Paragon only allows two withdrawals a year, and Wombat’s account restricts savers to one a month - consider Shawbrook’s account, which pays 5.02%.
And if you want a low minimum deposit account plus unlimited withdrawals, you can still earn 4.95% with the Ford Money Flexible Saver. Customers can open an account with just £1.
If you’d prefer the certainty of a fixed rate on your savings, check our best buys for one-year savings accounts. Your savings will be locked up for one year, and rates are currently exceeding 6%.
Are there other base rate tracker savings accounts on the market?
At the time of writing, there are three other base rate tracker easy access savings accounts on the market. according to data from Moneyfacts.
| Account | Rate AER | Minimum deposit | Withdrawals |
|---|---|---|---|
| Mansfield Building Society Double Access Tracker Saver | 5% | £1,000 | Two withdrawals per year |
| Family Building Society market tracker saver | 3.61% | £500 | 20 withdrawals per year |
| Family Building Society market tracker saver | 2.5% | £500 | Unlimited withdrawals. Balance can't fall below £500. |
Mansfield Building Society Double Access Tracker Saver offers the best rate on the market right now, at 5% AER. But it requires a minimum deposit of £1,000.
If you're looking for a base rate tracker with a lower minimum deposit, the next best rate on the market is with Wombat- at 4.75%.
Will interest rates go up?
If you’re considering opening a Wombat base rate tracker, you are probably asking will interest rates go up again, and if so, when?
The BoE will announce its next decision on interest rates on Thursday, 21 September.
The latest inflation figures show that inflation fell faster than expected in August, dropping to 6.7%. This could ease the pressure on the Bank of England to hike interest rates again this year.
In terms of tomorrow’s base rate decision, markets are expecting either no change to the 5.25% rate, or a 0.25 point increase.
-
Pension warning: one in five don’t know how much is going into their pensionHow to check your pension contributions and why it matters
-
50,000 power of attorney applications rejected – how to avoid common mistakesA freedom of information request shows that thousands of lasting power of attorney (LPA) applications are rejected due to errors. We explain how to avoid mistakes and reveal tips to make the process as straightforward as possible
