Interactive Investor

Banks hit back with two top savings deals

24th February 2021 14:55

Marc Shoffman from interactive investor

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In a boost to battered savers, two lenders have broken ranks and launched dynamic new products.

It is a tough time for savers at the moment, with cash products paying paltry returns.

Record low interest rates have removed much of the incentive to attract customer deposits with attractive savings products, and rates are at all-time lows. But there are finally some signs of life in the savings market.

Yorkshire Building Society has launched a Loyalty Regular Saver that pays a best buy table-topping 3.5%.

The rate is fixed for a year and you can access your money only once, but can make as many withdrawals as you want on the same day.

Savers can contribute between £10 and £500 per month.

There is a catch though, as the account is only open to existing customers who have products with the building society either before or on 1 January.

In contrast, the highest-paying regular saver rate open to all customers is 1.1%, from Leek United.

Additionally, TSB has made a play for the cashback market with the launch of a new Spend & Save Plus current account.

Customers can earn £5 cashback each month as long as they make 30 payments with their debit card over the same period.

The returns are dampened by a £3 monthly fee but users can also get a £100 arranged overdraft and can set up savings pots and get spending alerts.

It will also round up your spending to save the spare change.

In contrast, savers can earn up to 15% cashback with Santander’s 123 Current Account and 0.6% on balances up to £20,000 in return for a £5 monthly fee.

It comes as banks have also released attracting current account switching offers in recent weeks.

Savers can currently earn £125 by switching their current account to HSBC or First Direct.

Andrew Hagger of financial website MoneyComms, says the net reward for the TSB account was “fairly small” given the monthly fee.

He adds: “The in credit’ current account market is a barren wasteland compared with what it was a few years ago - Virgin Money is offering 2% but only up to a maximum balance of £1,000 and Nationwide Flex Direct pays 2% up to max £,1500 for the first year only, so not much to get excited about in that particular market.”

He describes the Yorkshire Building Society product as attractive.

Rachel Springall, finance expert for comparison website Moneyfacts, adds: “It’s great to see some lucrative offers on the market for savers in a low interest rate environment, but some deals are restricted to existing members or those who take out another product. 

“Current account perks are also returning but due to the record-low interest rate environment it’s unlikely we will see many headline-grabbing credit interest rate offers return to the market.”

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