Lensi Photography/Starling Bank.
Fintechs boost savings rates after Bank of England hikes interest rates again
Monzo, Starling, Zopa and Chase have all increased their rates to pass on savings to customers.
For the fourteenth time in a row, the Bank of England has raised its interest rates, this time to 5.25 per cent.
Despite the small relief of lower-than-expected inflation figures last month (7.9 per cent), inflation in the UK is still high compared to many major European countries and interest rates continue to rise.
In response, fintechs including Monzo, Starling Bank, Zopa and Chase have all made the decision to again up their savings rates and pass on interest rates.
Monzo has increased its interest rate on personal and join savings accounts from 3.7 per cent to 4 per cent — its fourth rate increase in the last eight months — while JP Morgan’s Chase is increasing the interest rate on its saver account to 4.1 per cent (after upping it to 3.8 per cent back in June).
“We're committed to helping our customers reach their savings goals which is why we're continuing to pass on interest rates where we can,” Chase everyday banking managing director Shaun Port said.
“With the cost of living remaining high, we know customers value flexibility and easy access to their money, without being charged fees, so they can manage their money effectively.
Starling Bank has increased the rates for its one-year fixed saver account, locking in a guaranteed return of 5.25 per cent.
Meanwhile, Zopa is passing along the full 0.25 per cent base rate increase to its easy access customers in line with the Bank of England’s rate increase.
Its interest rate on instant access savings has increased from 4.03 per cent to 4.28 per cent, while its boosted accounts for seven to 95 days have similarly increased by 0.25 per cent.
“Customers shouldn’t settle for low returns and should shop around for banks that reward them,” Zopa head of savings James Blower said.
“The best savings accounts offer a high-interest rate, good service, accessibility and tools for consumers to manage their money instantly with a few taps from their smartphones.”
Alongside a range of savings features that can help cultivate better savings habits, consumers are often likely to find better rates at digital banks than at incumbents,
At current rates, if a customer was to switch from the lowest-paying high street bank to the highest-paying digital bank, they would benefit from three times more interest — jumping from just 1.1 per cent (Lloyds Bank) to 4.63 per cent (Shawbrook Bank).