Increase in number of higher rate savings accounts

28 August 2008

Banks up rates to attract savers

New figures have shown that there are now more savings accounts offering interest rates equal to or above the base rate than there have been in previous years.

Two years ago 8% of easy access savings accounts offered an interest rate of 5% or over. Today this figure stands at 28%.

The figures have come from analysts Defaqto and have been taken as an indication that banks are fighting to attract savers during the current credit crunch.

The analysis by Defaqto revealed that 28% of savings accounts were rewarding customers with interest rates equal to or above the Bank of England base rate of 5% for deposits of £5,000.

At the same time last year, this figure stood at 21%, while in August 2006 it stood at 8%. In August 2005 it was at 19%.

However, Defaqto said that savers needed to be aware that few of these accounts come without restrictions, such as how many times customers can withdraw funds within a month.

David Black, Defaqto’s banking consultant, said: “It is encouraging to see so many accounts offering attractive headline rates but savers need to keep their wits about them to avoid choosing an unsuitable account.”

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