Published On: Fri, Jan 26th, 2024

Atom Bank increases interest rate on savings account to pay ‘excellent’ 5.1% | Personal Finance | Finance


Atom Bank has increased the on its one-year fixed account to 5.1 percent, earning an “excellent” Moneyfacts rating.

The account can be launched with just £50 and interest can be paid monthly or annually on the anniversary of opening.

Commenting on the deal, Caitlyn Eastell, a spokesperson at Moneyfactscompare.co.uk, said: “This week, Atom Bank has increased rates on a range of its Fixed Savers, including its one-year fixed option, which improves its overall position in the sector.

“Now paying a competitive 5.1 percent gross/AER, it only requires a minimum investment of £50, which may appeal to many savers.”

However, Ms Eastell noted: “Early access to this account is not permitted so investors must be comfortable with locking up their cash in the short-term to receive a guaranteed return.”

She added: “Savers looking to boost their income each month may also find there is a monthly interest option which pays 5.1 percent AER. Overall, this account receives an Excellent Moneyfacts product rating.”

Atom Bank is a digital challenger bank, founded in 2014, and is headquartered in Durham.

But while this account is paying more competitive returns, it isn’t currently topping the table in the one-year fixed savings sector.

SmartSave’s One Year Fixed Rate Saver is offering an Annual Equivalent Rate (AER) of 5.16 percent. The account requires a larger opening deposit requirement of £10,000 and up to £85,000 can be invested overall.

Interest is paid on maturity and withdrawals are not permitted until the term ends.

Placing just behind is Investec Bank pls’s one-year fix paying an AER of 5.15 percent. A minimum of £5,000 is required to open the account and interest is paid on maturity. Up to £250,000 can be invested and withdrawals are not permitted.

For savers with smaller deposits, Hampshire Trust Bank’s One Year Bond (Issue 62) is offering an AER of 5.1 percent and just £1 is required to open the account.

Interest is paid on maturity, up to £250,000 can be invested, and withdrawals are not permitted until the term ends.

The latest Moneyfacts UK Savings Trends Treasury Report data showed average savings rates fell across the spectrum month-on-month. Fixed rate bonds and ISA average rates had the biggest month-on-month rate cuts recorded in almost 15 years.

Rachel Springall, a finance expert at Moneyfactscompare, said: “The significant cuts seen across fixed rate bond and fixed ISA rates month-on-month are the biggest recorded in almost 15 years.

“This will no doubt come as a shock for savers who use these accounts to earn a guaranteed return on their hard-earned cash and have waited a couple of months to invest.”

However, Ms Springall noted: “Despite these falls, it is worth noting that average rates are higher than they were at the start of 2023, so many coming off a fixed rate will find better returns today if they want to lock into a deal of a similar term.”

She added: “Savers will need to consider all the different account options available to them to suit their short or long-term goals and move swiftly to take advantage of the top rates.”



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