ALDERMORE Bank has raised the rates on five of its savings account, which now offer up to 2.5 per cent interest.
Three of the accounts have the best rates going compared to similar ones but you’ll need to be prepared to lock away your savings for up to five years.
Getty – Contributor Aldermore Bank has raised rates – and three out of five of them are chart-topping
There are a handful of Sharia banks, such as Al Ryan Bank and Gatehouse Bank, that can beat Aldermore’s rates but they can’t guarantee your return.
Because of this, we’ve decided to exclude them from our comparisons – which makes Aldermore’s one, two and three-year fixed-rate accounts chart-toppers.
Savers can choose to shut away their cash for anything from one to five years – but the longer terms offer better rates. Here’s what’s on offer:
One-year fixed-rate savings account pays 2.1 per cent (up from 1.7 per cent)
Two-year fixed-rate savings account pays 2.35 per cent (up from 1.95 per cent)
Three-year fixed-rate savings account pays 2.4 per cent (up from 2.05 per cent)
Four-year fixed-rate savings account pays 2.45 per cent (up from 2.1 per cent)
Five-year fixed-rate savings account pays 2.5 per cent (up from 2.25 per cent)
The bank offers the top rate on its one-year fixed account, meaning that you’ll earn £21 on £1,000 savings and £105 on £5,000.
The next best deal is with Oak North which has 2.07 per cent.
The 2.35 per cent on the two-year fixed-rate account is also a market leader – the next best rate on this type of account is Oak North’s 2.31 percent.
Aldermore Bank Aldermore Bank has raised the rates on its savings accounts
At the end of the two years, your £1,000 savings will have been boosted by £47.55 or £237.76 on £5,000.
The three-year account also beats off competition with 2.4 per cent. It will boost £1,000 savings by £48.58 and £5,000 by £242.88.
Vanquis Bank and Union Bank of India actually beat Aldermore on rates for four and five-year fixed-rate accounts.
Last month, we reported how Aldermore’s two new table-topping Isa savings accounts offered 1.7 per cent on one-year fixed rates and 2.05 per cent on three-year rates.
Both types of accounts require you to lock your money away before cashing in – so what’s the difference?
An Isa lets you save tax free, where as the government will take a portion of the interest you earn on a savings account.
Darren Cook from Moneyfacts explains that the best type of account for you depends on how much savings you have, and whether it’s more than the Personal Savings Allowance (PSA).
This was introduced in April 2016 after a shake-up by the Government which means basic rate taxpayers can now earn £1,000 in interest a year tax-free – in whatever account they’re saving in.
Darren said: “It seems that average returns on Isas may only benefit a saver who’s used up their entire PSA.
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“However, savers must never forget that funds deposited into cash Isas with low interest rates, will be ring-fenced for future tax years when interests may be much higher and the PSA may no longer exist.”
You’ll need at least £1,000 to open any one of the Aldermore savings accounts, interest is paid yearly and you won’t be able to make any withdrawals during the term.
If an emergency means that you need to access your cash, you’ll forfeit 90 days worth of interest in terms of up to a year, and 180 days interest on accounts with longer terms.
Are you looking to invest in an Isa? We’ve put together a round up of accounts that offer the best saving rates.
What is the base rate? Is the Bank of England raising interest rates?
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