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Tandem Bank announced earlier this week that it would be increasing the rate top up of its instant access savings accounts. Through the Top Up, which is available as of January 23, customers can apply the interest rate to their instant access savings account. This will add a hiked rate on top of their existing interest rate which will apply for a 12-month period.
For example, if one of the savings accounts had an underlying rate of 2.55 percent AER, the Top Up would be 0.20 percent AER.
As a result, savers with the digital bank would see a new total variable interest rate of 2.75 percent.
Over the past year, Tandem Bank has been improving its savings offering to better support its customers and facilitate environmentally-friendly initiatives.
Ben Mitchell, the financial institution’s director of Savings, shared why this “competitive” rate increase is important for savers.
He explained: “At Tandem, we’re constantly looking at ways to ensure our customers are rewarded and have access to some of the most competitive savings products in the market.
“By introducing our savings Top Up, we can reward our customers and ensure they are receiving a great rate on their hard-earned savings.
“We’ve made it really simple for our customers to Top Up their current instant access interest rate and will be in touch with customers to provide them a link to the Tandem App to apply, or apply the rate on the phone.
“Before the Top Up period comes to an end, we’ll be in touch in plenty of time to let them know.”
It should be noted that customers who choose to apply the Top Up will not see a change to the underlying Instant Access Savings Account.
Savers with the bank will still have instant access to their money and will not need to go through the account opening process again.
They will automatically get any changes to the Top Up rate if they are inside their Top Up period.
After their Top Up period has come to an end, if there is another Top Up rate being offered at the time, the bank’s customers will be able to add the new interest rate boost to their account.
READ MORE: Recession fears continue despite UK economy growing
This latest rate increase from Tandem Bank comes amid the ongoing cost of living crisis which is being exacerbated by a rising inflation rate.
As it stands, the Consumer Price Index (CPI) rate of inflation is at 10.7 percent which is causing returns on savings accounts to be diminished.
To address this, the Bank of England’s Monetary Policy Committee (MPC) has raised the base rate to 3.5 percent
Rio Stedford, a financial planning expert at Quilter, shared her thoughts on the current state of savings accounts and the issue of a rising inflation rate.
Ms Stedford added: “Saving rates in isolation don’t mean anything, to get the full picture they must be tested against the current rate of inflation. If that is even close to double figures it’s unlikely even the best savings account will deliver anything other than a real term loss.
“It’s easy for heads to be turned by very attractive cash savings rates but in reality it’s one of the worst times ever to be in cash. Superficially the headline savings rates have increased but the gulf between the Consumer Price Index and the Bank of England base rate means that people’s cash is decaying at an alarming rate.”
The Bank of England’s MPC is set to announce an update regarding the UK’s base rate on Thursday, February 2, 2023.
ONS figures for January 2023’s CPI inflation will be confirmed on Wednesday, February 15, 2023.
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