How much could you gain on your savings with the new interest rate rise?

Inflation: Victoria Scholar discusses rise in interest rates

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The half a percentage increase is the largest single increase in 1.75 percent, meaning many people with ISAs and other savings accounts may get a better rate. Analysts at comparison site have urged savers to check they are getting the best on their account, as few high street banks have passed on the recent rate increases to their customers.

The group looked at the market for savings rate and found that at the start of August, the average easy access account was offering 0.69 percent, up from 0.59 percent for the previous month.

This compared with 1.17 percent for notice accounts, which increased by 0.1 percent compared with July.

For easy access ISAs, the average rate is 0.76 percent for easy access and 1.07 percent for notice ISAs, both increasing from the previous month.

Rachel Springall, finance expert at Moneyfactd, said: “Loyal savers may not be benefiting from the base rate rises and they could be missing out on a better return if they fail to compare deals and switch. 

“Interest rates are rising across the savings spectrum. 

“However, out of the biggest high street banks, only one has passed on all five base rate rises, which equate to 1.15 percent, and some have passed on just 0.09 percent since December 2021. 

“The patience of some savers may be wearing thin, but there is no guarantee they will see any benefit from a base rate rise.

“Thankfully, challenger banks and building societies continue to compete in this space and the average easy access rate has risen to 0.69 percent, up from 0.20 percent in December 2021. 

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“With this in mind, there are still accounts out there that fail to beat base rate so there is still more room for improvement.”

She said easy access accounts have remained popular, as people can quickly get at their money when they need it.

Rising rates are usually good news for savers, as long as the benefits are passed on by the banks.

However, with inflation running rampant, Britons will need to shop around for the best deals.

This was an opinion shared by Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, who warned savers need to “work hard”. 

She continued: “Savings rates have been creeping up since December, but some corners of the market have fared better than others.

“Once you have an emergency savings safety net of three to six months’ worth of essential expenses in an easy access account, it’s worth considering tying some of your savings up for a year, and cash in on competition between the challenger banks.

“As always, if you leave your saving in a high street bank, you will likely lag behind those paying the most competitive rates.”

According to AJ Bell, the top easy access account has risen from 0.71 percent on the day the Bank of England first started hiking rates in December up to 1.8 percent today. 

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Laura Suter, head of personal finance at the platform, added: “That means on £10,000 of cash you’re making £109 more interest a year than you were at the end of last year. 

“Today’s chunkier hike will give another boost to savings rates.”

Ms Suter also suggested Britons should be open to the idea of switching bank accounts, as this is “infinitely easier and quicker” than it used to be. 

However, she did offer a word of warning to savers on the rates they can secure both now in the future. 

She said: “In the fixed-rate savings market, where we’ve seen fierce competition to get to the top of the best buy tables. 

“Any fixed-rate you lock in today will mean missing out on future interest rate rises – banks aren’t stupid, they are trying to draw in money now to make more profits if rates rise further. 

“We’re still expecting the Bank to continue rate rising this year and well into next year, which means locking in a fixed rate savings account today means missing out on any of those increases.”

Additional reporting by Rebekah Evans

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