Flexible access accounts are becoming increasingly attractive as people may need to access their funds to cover the rising cost of everyday essentials. Many banks and building societies have increased the rates on their saving products as the base interest rate has increased.
Customers can deposit up to £250,000 in the Instant Access Account with Chip and get a 3.15 percent AER (annual equivalent rate) on their savings.
This means if a person deposited £1,000 in the account, after a year they would have earned £31.50 in interest. Interest is paid monthly.
People can set up regular deposits into the account and make any number of individual deposits.
Savers can instantly withdraw funds without incurring a penalty if a person needs to access money quickly.
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Chip is an investment and savings app which works by a customer connecting their current account to their Chip account, through Open Banking.
Eleanor Williams, finance expert at Moneyfacts, said: “Savers who want to be able to maintain access to their savings pot and want an account which enables both withdrawals and further additions may be tempted by the Chip Instant Access powered by ClearBank product.”
Other top-paying instant access accounts on moneyfacts.co.uk at the time of writing include:
- Shawbrook Bank – Easy Access (Issue 33) – 3.06 percent
- Al Rayan Bank – Everyday Saver (Issue 3) – 3.05 percent
- Sainsbury’s Bank – Defined Access Saver (Issue 39) – 3.05 percent
- Cynergy Bank – Online Easy Access Account (Issue 57) – 3.04 percent.
Among the latest banks to increase their interest rates is first direct, which is increasing the rates on two of its products later this week.
The rate on the FD Savings Account is going up from 0.9 percent to 1.2 percent on Wednesday February 28, and the rate on the FD Bonus Savings Account is increasing by the same amount.
The rate for balances up to £25,000 on the Bonus Savings Account is going up from 2.6 percent rate to 2.75 percent.
first direct is also increasing the one percent rate on balances above £25,000 to 1.6 percent. Chris Pitt, CEO of first direct, said: “We review our rates regularly in order to make sure we are offering value to our customers.
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“These boosted instant access rates will offer a better return for those customers that do need easy access to their savings.”
The Bank of England has continued to increase the base interest rate in efforts to tackle soaring inflation.
The base rate is currently four percent with some analysts predicting it could climb further this year.
Catherine Mann, from the central bank’s Monetary Policy Committee, warned further increases to the base rate may be needed “sooner, rather than later” to get inflation under control.
She said: “Monetary policy has taken a path which has been aggressive, but perhaps insufficiently so relative to the multiple shocks and the behaviours pushing up inflation.
“We have an inflation remit and will achieve it one way or another. Failing to do enough now risks the worst of both worlds.”
Victoria Clarke, UK chief economist at Santander’s corporate and investment banking arm, predicted high interest rates could continue for some time.
She said: “Concerns over sticky underlying inflation will likely force the Bank of England to hold policy at these restrictive levels this year, we think. We do not expect cuts in the base rate until 2024.”