One-Year Savings Rates Breach 3%

Updated on
  • 12-month savings rates are now topping 3%
  • The best rate in the market, going into the weekend, is 3.15%
  • The jump in inflation to 10.1% means the BoE is unlikely to slow down rate increases anytime soon.

12-Month Savings Rates Top 3%

Tom Higham, Acting Head of Savings, Hargreaves Lansdown:

“As expected, Fixed Term Deposit pricing is continuing its steady grind upwards, following a historic 0.5% base rate increase earlier this month. 12-month savings rates are now topping 3%, with the best rate in the market going into this weekend at 3.15%.

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There is a strong cohort of decent sized banks all offering 12-month rates above 3%, as such we expect rates to keep creeping north from here as they vie for position.

With inflation rising to 10.1% and forecast to hit 13.1% this autumn, the pace is unlikely to slow any time soon, so it's highly likely we will see further rate rises throughout this year, and with them, higher savings rates.”

Provider AER Gross Notice / Term Min Investment Interest Paid
Hampshire Trust Bank 3.15% 3.15% 18 month bond £1 Anniversary
QIB (UK) 3.15% 3.15% 18 month bond £1,000 On Maturity
Charter Savings Bank 3.15% 3.15% 18 month bond £5,000 Anniversary
QIB (UK) 3.10% 3.10% 12 month bond £1,000 On Maturity
Ahli United Savings Bank (UK) plc 3.05% 3.05% 12 month bond £1,000 On Maturity
Charter Savings Bank 3.05% 3.05% 12 month bond £5,000 Anniversary
Allica Bank 3.05% 3.05% 12 month bond £10,000 On Maturity
Hampshire Trust Bank 3.01% 3.01% 12 month bond £1 On Maturity
Shawbrook Bank 3.00% 3.00% 18 month bond £1,000 Anniversary
Paragon Bank 3.00% 3.00% 18 month bond £1,000 Anniversary

Source: Moneyfacts

What Inflation Means For Savers

Higher inflation is bad news for savers, because despite recent rate bumps, you could still lead an army of overweight elephants through the gap between inflation and saving rates. It means the spending power of our money is being gradually eroded by higher prices, so we need to ensure we’re getting the best possible rate on each slice of our savings.

We need an emergency savings safety net, which should cover 3-6 months’ worth of essential expenses for anyone of working age and 1-3 years for people in retirement. This needs to be in a competitive easy access savings account.

Keeping this cash somewhere competitive is key. You can’t keep pace with inflation in any savings account right now, but there’s a world of difference between it languishing in an account with a high street giant paying 0.01%, and switching it to a bank offering almost 2%.

To help close the gap on inflation, any money you need for planned expenses in the next five years still needs to be in savings, but can be fixed in return for more interest. The rise in one-year rates in particular means you could be getting significantly more for this slice of your cash.

If you have savings you won’t need for five years or longer, it’s worth considering whether any extra money could be working harder for you in investments. These will rise and fall in value over the short term, but over 5-10 years or more they stand a much better chance of beating inflation than cash savings.”

How HL Active Savings Works

Launched in 2018, Hargreaves Lansdown’s Active Savings is an online cash savings platform which provides a solution for the 49% of people who haven’t moved their savings in the past 5 years, and the 37% who’ve never switched**.

Through one single application, savers can move money between accounts with different banks and building societies in just a few clicks, removing the need to ever complete another application. Active Savings means all cash can be kept in one place, and makes it much simpler for savers to choose another product when their fixed-rate comes to an end.

Hargreaves Lansdown chooses to partner with banks that only offer consistently good rates, rather than banks offering a high introductory rate which drops to a much lower rate after a short period of time.

We do not charge clients for using the Active Savings Platform, instead, Hargreaves Lansdown charges the account providers that we partner with a percentage of balances held with them.

**Opinium survey for Hargreaves Lansdown in October 2020.

About Hargreaves Lansdown

Over 1.7 million clients trust us with £123.8 billion (as at 30 June 2022), making us the UK’s number one platform for private investors. More than 98% of client activity is done through our digital channels and over 600,000 access our mobile app each month.