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April magazine column


Savings rates fall

Savings rates have fallen further since last month’s column.  Marcus, Union Bank of India and Tandem all cut their easy access best buy rates of 0.50% rates.  Paragon Bank now lead the way on easy access with their online saver paying 0.41%.  There are ten banks paying 0.40% behind them so I don’t anticipate further cuts here as there’s enough support in the market to hold this position.

We also saw several rate cuts to fixed rate bonds - most notably in 3 Year Fixed where the best rate has collapsed from 1.10% to 0.91% (Zopa Bank).  However, this doesn’t tell the full story as the cuts are mostly from the Sharia banks.  Behind those headline rates, there’s been an increase in competition, and we’ve seen a slight nudge up of rates.

In 1 Year Fixed, a bit of price competition has broken out with Shawbrook, Hampshire Trust and Zopa all increasing their rate to 0.59%, which has now prompted Zopa to go top paying 0.60%.

DF Capital have come back to the market with an 18 Month Fixed paying 0.68% and a 2 Year paying 0.76%, both of which were top of market, until the 2 Year was beaten by Sharia provider, BLME, who have increased their rate to 0.80%.


New best buy ISAs for the start of the tax year

ISAs were a completely different proposition with the new tax year heralding new best buy rates in every category bar 2 Year Fixed, where Hampshire Trust Bank’s 0.60% continues to lead the way, although Close Bank did slot in just behind with a new 0.57% rate.

Otherwise, the following new best buys were launched to kick off the new tax year:

Easy Access - 0.40% - Charter Savings Bank

30 Day Notice - 0.40% - Aldermore Bank

1 Year Fixed - 0.45% - Charter Savings Bank

3 Year Fixed - 0.70% - Close Bank

5 Year Fixed - 1.10% - Shawbrook Bank

Savers interest in ISAs typically wains after the end of April and I can’t see any stimulus for rates to increase beyond the end of this month so, if these rates appeal, I’d take advantage of them while they are there.  Sadly, I can see rates dwindling further come May and beyond.


Switching offers return for current accounts

At the start of the year, there were no financial incentives to move current account but that’s all changed in recent weeks and there’s significant competition to encourage us to switch bank at the moment. 

The best financial incentives on offer are:

  • HSBC

Switchers to HSBC’s Advance account get £125.   You must open an account and start a switch within 30 days and pay in £1,750 or more per month, which is the equivalent of having a salary of £25,500 per annum and having this paid directly to your current account. The account also comes with a 1% regular savings account, which smashes the best easy access rates, which you can pay up to £250 per month in to.

  • Halifax

Halifax’s Reward account pays £100 to switchers who can also choose a reward each month, one of which is £5 per month in cash.  You will need to move quickly to take advantage of this offer though as you must have an account open and start a switch by 4th May.  You will need to pay in £1,500 per month, which is the equivalent of having an annual salary paid in of £21,100, or you’ll be charged £3 per month for the account.

  • firstdirect

firstdirect pay £100 cash within 28 days to switchers and has a lower requirement of paying in just £1,000 within three months of opening.  They have historically won just about every customer service award going and top most customer polls as the best bank for service, although new banks Monzo and Starling are now rated very similarly for service and are giving firstdirect a run for their money.  They also offer a 1% regular saver and £250 interest free overdraft.  I’ve been a customer of theirs for several years and can’t fault them.

Wine lovers may want to look at Virgin Money who don’t pay any cash but will send you 12 free bottles from Virgin Wines, which they value at £138.  They’ll also donate £50 on your behalf to any charity from the 13,000+ on the Virgin Giving website and give you an interest rate of 2.02% on up to £1,000 in your account, which is worth £20.20 a year if you maximise it.

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