Challenger banks paying three times as much savings interest as high street banking giants

Savers have had a tough time of it in recent years with interest rates driven down to rock bottom, mainly thanks to a government hell bent on protecting the retail economy by keeping borrowing rates low.

However not all providers are offering savers a terrible deal – if you have a fixed rate savings bond with one of the big banks then you need to think again when it matures as you could easily earn three times as much interest with one of the lesser well known players or challenger banks.

But surely there’s a risk attached to such a strategy? – no far from it, all the institutions listed below are protected by the Financial Services Compensation Scheme so any balances up to £85,000 per depositor are covered if for some reason they were to go bust – exactly the same cover as for customers of Barclays, HSBC, Lloyds, NatWest and Santander.

If you look at the rates being offered on a one year fixed rate bond for example, HSBC and NatWest are paying a measly 0.50% whilst Barclays isn’t much better at 0.55%.

Everybody should be trying to bag themselves the best savings rates – it’s crazy to let the big banks profit at your expense just because you can’t be bothered to switch providers.

The best deals for a one year fixed term (and no withdrawals) come from Atom Bank (App only) 1.80%, Kent Reliance 1.70%, Paragon Bank 1.60% and Charter Savings Bank 1.55%

So just to put it into perspective, if you had £20,000 with HSBC or NatWest at 0.50% you would earn £100 in interest in 12 months – however at 1.60% with Paragon Bank you’d earn £320, 1.70% at Kent Reliance £340 and 1.80% at Atom Bank would bag you £360.

Don’t dismiss a savings provider just because you’re not familiar with the name, if it has FSCS protection then it makes perfect sense to move your money and to get the highest savings rates you can – risk free.

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