Savings: Interest rates to rise soon? Keep your options open with these five accounts


iStock_000015528657_ExtraSmallMark Carney, the Governor of the Bank of England, has said interest rates may rise sooner than expected.

Financial experts now expect interest rates to rise in the first six months of 2015, or possibly as early as this autumn. But the speed of any rate rises is expected to be slow, with Carney saying: “We expect that eventual increases in Bank rate will be gradual and limited.”

The news will come as a welcome surprise for savers, many of whom have given up hope of a rise in interest rates.

But it creates a dilemma; which accounts should savers use now, to get an attractive rate of interest, without tying up their cash so that it can be moved when interest rates do rise.

We’ve researched the market and come up with six savings accounts which fit the bill.

CoventryInstant access to your Cash ISA: Coventry Building Society Branch Instant ISA

This account pays a gross interest rate of 2% per year and is ideal for new ISA (Individual Savings Account) subscriptions.

Don’t forget that the maximum you can pay into an ISA will increase to £15,000 from 1st July.

There are a couple of drawbacks though; the account is only available through a branch of the Coventry Building Society and it doesn’t allow transfers in from other Cash ISAs.

As an alternative, the Buckinghamshire Building Society Chiltern Gold Nugget (Issue 4) account allows one penalty free access each year and also pays a rate of 2%. Unlike the Coventry Building Society account however, it is available to open by post making access easier for some.

Tesco BankIdeal if you want to tie up your ISA cash for a year: Tesco Bank Fixed Rate Cash ISA

If you think interest rates won’t rise until next year you might be prepared to tie up your savings for a year.

The Tesco Bank Fixed Rate Cash ISA currently pays a rate of 1.65% gross per year and is available to open over the internet with a starting balance of just £1. It also accepts transfers from other Cash ISAs.

Eagle eyed savers will notice that the interest rate on the one-year fixed rate is below the instant access Cash ISA. But you might prefer the certainty of a fixed rate, rather than variable rate of interest, which could fall.

BritanniaInstant access outside an ISA: Britannia Building Society Select Access 5

If you have non-ISA savings and want instant access, take a look at the Britannia Building Society Select Access 5 account.

If you make no more than four withdrawals per year, which should be enough for most people if they plan carefully, the interest rate is 1.65% gross per annum.

The account can be opened over the internet, by phone or in a branch and has a minimum opening balance of £500, which should make it accessible for most savers.

First SaveOne year fixed rate for non-ISA savings: First Save One Year Fixed Rate Bond 27th Issue

First Save won’t be the first bank most savers think of using, but their one-year fixed rate bond currently pays a very competitive rate of interest and the bank is a member of the UK Financial Services Compensation Scheme (FSCS).

The account pays 1.88% gross per year, can be opened with a £1,000 and is available online.

AldermoreAn account for business owners: Aldermore Six Month Fixed Rate Business Savings Account

Many businesses hold cash, perhaps money put aside to cover a Corporation Tax bill or simply the result of running a profitable business.

Business current accounts generally pay a pretty meagre rate of interest, it therefore make sense to shop around for a better alternative.

The Aldermore Six Month Fixed Rate Business Savings Account currently pays 1.50% gross per year, can be opened with just £1,000 and is available online.

If your business has money you are prepared to tie up for a year then the rate rises to 1.75%.

How long should you tie up your savings?

Everyone is different; the answer comes down to when you think the Bank of England will push up interest rates and of course, whether the banks and building societies will pass on the increases.

Savers need to be careful though, not to be tempted into long-term fixed rates only to regret their decision when interest rates rise.

Of course we’re here to help.

If you would like advice on your savings options call one of our team today on 0115 933 8433.

Alternatively email or complete our online enquiry form by clicking here.