Martin Lewis’ MoneySavingExpert warns 'don't accept less' than this saving rate

01 January 2024 , 14:49

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Martin Lewis is the founder of MoneySavingExpert.com (Image: ITV)

Martin Lewis' MoneySavingExpert.com (MSE) team has revealed the exact rate you should be getting on your savings - as many are still leaving their money languishing in low-paying accounts.

Savings rates have improved dramatically over the last year after the Bank of England hiked its base rate 14 times in a row. The base rate is now at 5.25% and has been held at this level for the past three Bank of England meetings. It stood at just 0.1% in December 2021.

Writing in the latest weekly MSE newsletter, the team urged savers to make sure they are getting at least 5.2% interest on their savings - and warned "don't accept less" than this. They said: "Rates continued to rise for much of 2023, though a hold in the Bank of England base rate led to a dip towards the end of the year. Overall, it's a good time for savers to check what they're earning - if it's less than 5.2%, it's time to ditch & switch."

The best easy-access rate at the time of writing is 5.22% from Metro Bank, and the best-paying fixed rate accounts are from Ikano Bank and Investec, which both pay 5.3% fixed for one year. If you're able to give notice on when you want to withdraw your savings, Vanquis Bank pays 5.5% but you need to let them know 90 days before you want to make a withdrawal.

Regular saving accounts pay even more than this - but you're normally limited to how much money you can save each month. Nationwide has launched a linked saver which pays 8% fixed for one year - but you can only deposit up to £200 each month.

Martin Lewis issues 8-week warning to phone users ahead of huge price hikes

When picking a savings account, make sure you are covered by the Financial Service Compensation Scheme (FSCS) which protects up to £85,000 of your money if a provider goes bust.

There is an allowance you can earn in interest each year year tax-free. The personal savings allowance is £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers. This doesn’t include interest earned in ISA accounts, as these are tax-free savings products. You can put away £20,000 each year into ISAs.

Levi Winchester