United Trust Bank (UTB) is supporting UK Savings Week with the launch of a 30-day notice savings account offering tiered variable interest rates for different savings balances.

The Bank’s personal product will offer a 4.6% (variable) Gross AER* on balances from £5000 to £9,999.99 and a higher rate of 4.7% (variable) Gross AER* on the whole balance once it reaches £10,000 or higher. The product is designed to encourage customers who open their accounts with smaller pots to save regularly and attain the higher interest rate. The minimum initial amount required to open the account is £5000. Rates and information are correct at the time of publication and the product is variable so interest rates can go up or down.

UK Savings Week is an annual campaign run by the Building Societies Association which aims to raise awareness of the importance and benefits of saving and encouraging good saving habits. This year’s campaign is focused on educating consumers about how to make more of their savings and take advantage of the highest interest rates available to savers in more than 14 years.

This year’s campaign runs from the 18th to the 24^th of September 2023 and has been introduced through the collaboration of several credit unions, building societies, and other saving providers, as well as consumer groups and debt charities.

Find out more about UK Savings Week and how you can make your money work harder here.

New 30-day Notice Account
United Trust Bank’s new 30-day Notice Account requires a minimum initial deposit of £5,000 with interest paid annually on the 31^st October. Interest is calculated daily using the cleared balance of the account.

• Balances of £5,000 to £9,999.99 = Rate 4.6% (variable) Gross AER*

• Balances of £10,000 or more (to a maximum of £1 million) = Rate 4.7% (variable) Gross AER*

The estimated balance after 1 year using a deposit of £5,000 and receiving 4.6% Gross AER* would be £5,230.

The estimated balance after 1 year using a deposit of £10,000 and receiving 4.7% Gross AER* would be £10,470.

These projections assume the interest rate does not change and that no withdrawals or deposits are made during the first year. The projections provided are for illustrative purposes only and do not take into account individual circumstances.

New research from the Building Societies Association (BSA) has found that, despite the recent focus on interest rates, over a third (34%) of UK savers never compare the rate on their savings accounts to others available in the market – potentially missing out on nearly £1136** extra income a year. In addition, three in ten (30%) revealed they never check what their rates are with their own bank or building society, with many consumers potentially missing out on ‘free money’ by holding their savings in accounts offering uncompetitive rates.

Joe Harris, Product Manager at United Trust Bank, said: “United Trust Bank is excited to support the Building Societies Association’s UK Savings Week and to launch this new savings account with tiered interest rates as an incentive for customers to save regularly and earn even more interest as their savings pot grows.

“Savers are benefitting from some of the highest interest rates since 2008, so now is an excellent time for people to check that their savings are working hard and earning the interest they deserve rather than languishing in a low, or even no, interest bank account.”

 

*AER stands for Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once each year. GROSS is the interest rate without the deduction of income tax.

** – £1136 is based on a balance of £21,841 – which according to BSA research is the average balance held by people with savings – earning the current best-buy instant access account rate of 5.2% AER (Source: Moneyfacts 5th September 2023) for a year compared to no interest in a current account. The figure is rounded up to the nearest whole GBP.

Research conducted by Opinium on behalf of Building Societies Association between 21 – 27 June 2023 with a nationally represented sample of 2,000 UK Adults

Author: Anna Bowes | Co-Founder –  Savings Champion

Fixed Rate Bonds are always popular – there’s something very settling about knowing how much income you are going to get and when, especially when the bonds on offer are paying a far more significant return than they were in the past. At the time of writing, the average rate of a 1-year fixed rate bond is 2.69%* – up from just 0.62% a year ago. That is more than 4 times higher!

What is a fixed rate bond?
As the name suggests, a fixed rate bond pays a fixed interest rate for the term of the bond – so you know how much you will earn over the duration. A key thing to be aware of is that once you have put your money into a fixed rate bond, usually, there is no access at all until it matures, except on death when the estate will be able to access the money as required. In the simplest terms, as a result of this lack of access, banks and building societies will often pay higher interest rates than they do on more accessible accounts, as they know that they have a predictable pot of money that they can lend against.

What are the pros and cons of a fixed rate bond?
Well, we already mentioned that there is no access, so it is important to make sure that you are happy to commit the cash you are depositing for the full term.

Next, the fact that the rate of interest is fixed for the term can be viewed as a pro or a con, depending on what happens to savings rates once your money is locked away. If other savings rates rise, you may feel annoyed that you locked in – but if interest rates fall elsewhere, you’ll be protected from that downside, so will feel pretty pleased with yourself.

But even if the rates on offer do rise after you’ve locked in your cash, remember that at least you have made a move to start to earn more interest. Those who are always waiting for something better to come along are missing out on earning more interest while they wait.

What else is available?
If you are worried that interest rates are still heading up, a variable rate account may be something to consider.

Variable rate accounts tend to fall into two types– easy access accounts and notice accounts. The former allow you to take some or all of your money when you like, the latter require you to give a set notice period before you can take your money out. And, of course, because they are variable rate accounts, the rate of interest can be changed at any time – up or down.

The problem is that with the majority of variable rate accounts, it can be a bit hit and miss as to whether any Bank of England base rate increases are passed on in full – or even in part. So, there is another option – a tracker account.

How do tracker savings accounts differ?
Tracker accounts normally pass on any changes in base rate, up or down, soon after the Bank of England makes its announcements. However, as with most savings accounts, the devil is in the detail, and tracker accounts are no different. Some accounts truly track the base rate, so you can be sure you will always be earning what the Bank of England base rate pays – or sometimes even more. But others are more loosely linked to the base rate – so could be guaranteed to pay no less than 1% under base rate, for example. Others track other provider’s savings rates rather than the base rate – so you would be tracking the market rather than the Bank of England directly.

What should I choose?
This is the tricky bit, as it depends on your own situation, any existing accounts or investments you have, and what you believe will happen to interest rates in the future.

If you believe that the base rate, and therefore savings rates, are going to continue to rise above the levels that you can earn on a fixed rate, you may want to consider a tracker account or another variable rate account. But if you believe that rates will start to fall – or have at least peaked – you may wish to take advantage of a higher paying fixed rate bond.

If you are simply not sure, you could do a bit of both. Perhaps open a fixed rate bond with some of your cash, to take advantage of the higher rates currently available and leave some in a tracker or other variable rate account, to take advantage of any further rate rises.

One thing for sure is that you should do something, especially if you are one of the many with cash languishing in your current account – or a poor paying savings account. According to Bank of England statistics there is £267 billion** sitting in accounts earning no interest at all! Making sure you keep your cash in competitive savings accounts will help to mitigate the damaging and eroding effect of inflation – and simply put more pounds in your pockets.

*  Rate correct as at 24 Oct 2022

** Bank of England figures for August 2022 (Bank Stats Tab6.1 – Household sector Non-interest bearing deposits)

Find out more about our Tracker accounts for individuals, and our Tracker accounts for Businesses or Charities.

Although this email and article may contain helpful information and tips, these are not personal advice. You may wish to seek advice from a financial advisor if you are unsure what’s best for your own personal circumstances.

You can find out more about Savings Champion here