Despite the low interest offered to savers by many of the big high street banks, those looking to make their savings work for them can find better returns with challenger banks.
Challengers save savers
There have been a whole host of new challengers entering the savings market over the last 12 months: Atom Bank, Zenith, Masthaven Bank, Ford Money, and most recently, PCF Bank.
All these challengers offer competitive rates on both short-term bonds and instant access accounts, making them extremely attractive to savers.
It’s certainly a savers’ market as all these smaller banks are in intense competition with each other to get a share of investors’ cash.
For those savers looking to invest their cash in fixed rate accounts, there are a number of challenger banks who are all offering increased rates. These include Charter Savings Bank, Harrods Bank, Paragon Bank, Fidor Bank, and Axis Bank UK Ltd.
Fear of the unknown
Despite the tempting rates offered and the wide range of product choice offered by challenger banks, many savers are put off simply because the smaller banks are not well-known.
They don’t have the perceived authority and security of the high street ‘big boys’ and people are afraid that their money may not be safe.
However, these fears are unfounded in most cases.
Most of the challenger banks come with the same UK Government-backed financial protection as their more established and better-known counterparts, so there should be no concerns that savers’ money could be lost if the bank went bust.
You should be aware that some Banks based in the EU without a UK base may have compensation schemes associated with their country of origin.
A different way of doing things
Many of the challenger banks do not have high street premises, preferring instead to keep their overheads low by operating solely online.
Challengers also need to keep a closer control over the way in which their funds are managed, which is why they are keen to grab savers’ attention with good rates and deals.
So, if you have money to invest and you’re looking for the best savings rates, it is really well-worth considering one of the challenger banks.
Remember that you will need to be comfortable with banking online and moving away from the more familiar high street names, but doing so could gain you a much better return on your cash.