Top easy-access savings account now offered by Skipton BS not NS&I

There is a new name at the top of the independent This is Money savings tables for the first time in four months with Skipton Building Society launching a best buy easy-access account.

The mutual enhanced the rate on its online account to pay 1.2 per cent interest on savings of £1 or more, knocking National Savings & Investments off the top spot.

At the start of August it offered a previous issue of the same account paying a lower rate of 0.95 per cent and the move boosts hopes of a revival in the beleaguered easy-access market.

Golden pig: A new best buy easy-access has arrived from Skipton Building Society

Golden pig: A new best buy easy-access has arrived from Skipton Building Society

Golden pig: A new best buy easy-access has arrived from Skipton Building Society

The last time NS&I’s Income Bonds, which pay 1.15 per cent monthly interest, did not top our best buy tables was on 14 May.

The Treasury-backed bank has absorbed billions of pounds from savers over the last six months and has almost single-handedly propped up the easy-access savings tables, after the government gave it the green light to raise as much as £35billion in 2020-21.

NS&I’s decision to hold firm and reverse cuts to its easy-access accounts came as other banks slashed their rates in response to the economic shutdown caused by the coronavirus pandemic.

While Skipton’s account comes with a 0.5 per cent bonus which lasts for 12 months, reducing the interest paid on £10,000 of savings by £50 a year to £70, and pays interest annually, the announcement is a rare piece of good news for savers after a recent recovery in interest rates, which had fallen to record lows this year.

The revival, which began in July, had mainly been among short-term fixed-rate bonds and cash Isas offered by small challenger banks and building societies, with NS&I’s place at the top of the best buy easy-access tables untroubled since May.

But with challenger banks now having to leapfrog NS&I, which took in a net £14.5billion from savers between April and June, in order to attract deposits, savers will be hoping for more competition at the top of the best buy easy-access tables on the back of Skipton’s move.

How easy-access savings rates have begun to rebound 
Date  Top five easy-access rate average  Best buy easy-access rate 
11 May  1.18%  1.2%
15 June  1.07%  1.15% 
13 July  0.92%  1.15% 
17 August  0.90%  1.15% 
7 September  0.91%  1.15% 
15 September  1.01%  1.2% 
Source: Savings Champion

The launch means the top five easy-access accounts on the market now pay an average of 1.01 per cent, the first time they have paid more than 1 per cent on average since June, according to the analyst Savings Champion.

And although the average easy-access account still pays just 0.22 per cent, largely thanks to Britain’s biggest banks paying as little as £1 on every £10,000 saved, this is up from 0.18 per cent at the start of August, Savings Champion said.

It means the difference between the top easy-access rate available and the average is close to £100 in interest a year on £10,000 of savings, meaning savers who wish to make the most of the record amounts of money stashed away during lockdown should switch.

This is Money reported at the end of July how savings in the first six months of this year swelled the deposits of Barclays by 10 per cent, or £20.2billion, and of Santander by £6billion, despite the two big banks paying savers little in return. 

Many of the top banks pay just 0.01 per cent on these bread and butter accounts.

Meanwhile, Andrew Davis, commercial director at TSB recently said it was ‘a great fallacy’ that the interest paid on savings was important to customers, describing them as only ‘the icing on the cake’.

While some will disagree, it is likely large numbers of people are simply sticking surplus cash into accounts alongside their current account for ease, rather than rate chasing.   

Skipton is part of the Financial Services Compensation Scheme protected cash up to £85,000 and is Britain’s fourth biggest building society, with 1 million members and around 100 branches.  

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