Martin Lewis has issued a plea to savers, urging them to check their savings accounts to see what the interest rate is.
It came as the financial journalist predicted it could be the peak for interest rates on savings, following the end of 14 consecutive hikes to the Bank of England base rate.
“I think we’re probably at the peak of savings rates for the moment,” he said, before adding the caveat: “I don’t know – I don’t have a crystal ball.”
Mr Lewis explained easy access interest rates, on average, seem to be plateauing, while fixed interest rates seem to be dipping slightly, but both are now greater than the most recent Consumer Price Index (CPI) inflation rate.
Martin Lewis gave the savings warning on The Martin Lewis Money Show Live
PA
However, the founder of Money Saving Expert said millions of people are not accessing the top savings account, and putting their money in savings accounts paying interest rates which are lower than the inflation rate.
Speaking on The Martin Lewis Money Show Live on ITV last night, the broadcaster said: “I want you to check what you’re earning in savings, and if you’re earning anything less than five per cent, we’re going to up it, and many of you can earn a lot more.”
The financial journalist went on to list the top savings accounts right now in terms of interest rates, but pointed out first-time buyers and people on Universal Credit could benefit from other accounts, the Lifetime ISA and Help to Save respectively.
He also warned people they could be at risk of paying tax on their savings, but there are way to protect oneself from this.
First up, he discussed the best regular savings accounts.
The money saving expert said: “The highest possible interest rates come from regular savings accounts, where you can earn up to eight per cent.
“These give you higher rates but you can only put small amounts in.”
Mr Lewis first highlighted Nationwide Building Society’s Flex Regular Saver, which pays eight per cent AER/gross per year, variable.
He said: “Nationwide pays the most interest – eight per cent for one year variable.”
Customers can put in up to £200 per month into this account, and those opening a current account with the building society for this linked regular saver may also be able to get a switching incentive.
Mr Lewis said: “If you’re not with Nationwide, you can switch your bank account to it at the moment and it’ll pay you £200 to switch.”
He also pointed out savers could put between £25 to £300 a month into first direct’s regular saver, which is paying a fixed seven per cent interest rate for one year.
For fixed rate savings accounts, which means savers will not be able to withdraw the money during the term, Mr Lewis said Hampshire Trust was the top fix for the short-term, paying 5.56 per cent for a fixed six-month period.
For the money expert’s top one year fixes, Metro Bank pays 5.8 per cent, on a minimum of £500.
His top two-year fix is Hodge Bank’s 5.51 per cent, on a minimum of £1,000.
Whatever the type of savings account, Mr Lewis said the “minimum” interest rate a person should be earning is five per cent.
For the top easy access accounts, Mr Lewis highlighted the following options:
- Top linked to bank account – Santander Edge Saver which pays seven per cent up to £4,000. Savers should note the Edge Current account has a £3 a month fee.
- Top open to all – Metro Bank pays 5.22 per cent on a minimum of £500 and Ulster Bank pays 5.2 per cent on a minimum of £5,000.
- Top High Street branch (and online) – Post Office offers 4.1 per cent on a minimum of £100.
It’s important to note that savers holding money with a UK-authorised bank, building society or credit union will have protection of up to £85,000 per eligible person, per bank, building society or credit union, thanks to the Financial Services Compensation Scheme (FSCS). It means if the bank, building society or credit union fails, savers will get compensation for their savings of up to £85,000.
The Martin Lewis Money Show Live continues next Tuesday on ITV.
