Leading experts have deviated from the norm this week by suggesting that savers should take a stand against the poor interest offered by the majority of high street banks, and switch to lesser-known enterprises in order to earn money on their savings.
The recommendation comes as interest rates continue to stay seriously low, leading to increasing dissatisfaction on the part of savers.
One place where better interest rates can be found is with new banks – in particular, those that only exist online or via an app – and three have been put forward as front-runners: Atom, Secure Trust Bank, and Wyelands Bank.
Amongst the best options for those hoping to earn a solid amount of interest on their savings over a one-year period, these could make a real difference to profitability for those who are willing to take the risk and switch.
Atom is a particularly interesting suggestion.
An innovative, app-based bank, it offers interest of 1.90 percent on its one-year fixed account, meaning that those who deposited £10,000 would find themselves with an additional £190 in their account at the end of this period simply by not touching their money.
If we compare this to high street names, such as NatWest and HSBC, which only offer interest rates of around 0.5 percent, this would mean an additional £95 in your pocket at the end of the year.
Even for savers who desire the option to take their money out at any time, less well-known banks still provide better interest rates than their high street equivalents, with Ulster Bank being an ideal example of this, offering 1.25 percent interest compared to the 0.01 percent available from Natwest and HSBC. This equates to earning £125 over the course of a year, as opposed to £1.
Expert Anna Bowes says: “There’s no difference from banking with a bank on the high street or a new bank. These new banks are the saviour of the savings market at the moment, and there’s no real reason not to use them. Don’t stand for the really poor interest rates from big banks.”
For most savers, however, a very real worry remains: is their money as well protected by less well-known brands? According to the experts, that depends on whether they’re covered by the Financial Services Compensation Scheme, which ensures that individuals are safe for savings of up to £85,000 in a sole account, and £170,000 in a joint account.
Speaking on the subject, financial professional Andrew Hagger says: “People shouldn’t be put off by saving with a bank they have never heard of. Because they’re often online or through an app, they have no overhead costs, and they don’t have to pay big branch fees, so they can afford to pay more interest. You should just make sure that the bank is covered by the FSCS, so look out for the purple logo.”
For savers, the choice is certainly one worth considering: stay with what you know and profit less, or listen to the experts, increase your earnings and take your chances with a new and enterprising venture?