This news comes as savers are looking for the best ways to protect their finances and boost during the cost of living crisis. One of the factors exacerbating the cost of living issue is inflation, which is reaching a 40-year high of 9.1 percent. Experts believe the UK’s inflation rate could reach as high as 11 per cent, raising concerns among households.
As a result, banks and financial institutions, such as Nationwide, are announcing new releases of existing products and raising interest rates in an effort to assist savers.
Earlier this week, the builders’ association confirmed that it was releasing a new edition of its One Year Triple Access Online Saver.
This particular account allows savers to make up to three withdrawals within the 12-month term.
Any further withdrawals will turn the interest rate back to 0.10 per cent for the rest of the period.
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After 12 months, the account automatically switches to one of Nationwide’s instant access accounts.
In addition, the building society has confirmed that it has raised interest rates on its loyalty accounts.
Existing members who use either Loyalty Saver, Loyalty ISA and Loyalty Single Access ISA accounts will see rates increase by 0.25 percent to 1.25 percent gross / AER from August 1, 2022.
While none of these rates match the 9.1 percent inflation that affects savers, it compares well with similar products on the market.
As of last week, the new increased rates by Nationwide Building Society are:
One year fixed rate ISA – 1.40 percent AER / tax free (fixed)
One year fixed rate bonds / online bonds – 1.40 percent AER / gross per year (fixed)
Two years fixed rate ISA – 1.70 percent AER / tax free (fixed)
Two year fixed rate mortgage / online mortgage – 1.70 percent AER / gross per annum (fixed)
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With inflation beating the rate of many savings accounts, including those run by Nationwide, savers are worried about what potential returns they will get.
Alice Haine, a personal finance analyst at Bestinvest, said: “Savers who may have celebrated the Bank of England’s latest quarterly point increase in the base rate to 1.25 per cent will not party for very long.
“While banks and building societies are slowly raising the savings rates they offer, it is little consolation for savers who are already seeing their cash pots swallowed up by rising prices – which is yielding a negative real inflation rate on their savings.
“However, it’s still important to have some cash in an easily-accessible savings account as an emergency backup for any unexpected expenses, so look around for the best rates to ensure every penny works as hard as it can.
“If you can afford to lock away money for a longer-term horizon, such as five to 10 years, then investing in an ISA or SIPP could be an inflation-beating strategy.”