Why it need not be desperate times for savers - Gareth Shaw

Dear Gareth, I am 93 years old and need a monthly income from my savings. I do not bank online and have always used fixed-rate building society/bank/postal accounts.

Have you any suggestions how I can find the best savings account suitable for me? Doreen White, via email

Gareth says…

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It’s a desperate time to be a saver at the moment.

Interest rates are at an historic low.

With the Bank of England base rate remaining at its record low of 0.1%, the rates on traditional cash savings accounts and tax-efficient cash Isas have plummeted.

The best instant-access savings account currently pays 0.65% AER. That is a return of a miserly 65p for every £100 you save.

In many sectors, the best deals tend to be reserved for people that open and/or manage their accounts online.

In the savings market that is broadly true, although you can get access to some of the top rates in the market through postal banking.

For example, Coventry Building Society has an account paying interest on a monthly basis that can be operated by post, paying the top

instant-access rate of 0.65%.

The downside with this account is that it restricts access to the account to four penalty-free withdrawals per year.

Anything more will see you lose 50 days’ worth of interest. Interest can be paid to you on a monthly basis, however, so this could be a good fit.

The reason I mention instant-access savings accounts is that they could act as a kind of holding account for you to try and anticipate higher rates.

Inflation (measured by the consumer price index) is currently hitting 3.2%.

The Bank of England thinks it could exceed 4% by December and its governor, Andrew Bailey, indicated this week that the Bank could increase interest rates to counter the rise in


If you are locked into a fixed-rate deal now, you may miss the increase in savings rates that can be expected when the base rate increases.

So having your money in an account you can move quickly and easily might be a benefit to you.

If you do want to stick to fixed-rate accounts, rates vary depending on the length of time you’re willing to lock your money up. You can expect to earn 1.27% AER from Charter Savings Bank for a one-year fixed-ate postal account; Kent Reliance and Charter Savings Bank both pay 1.41% AER over two years; again Charter Savings Bank pays 1.46% AER over three years; UBL UK pays 1.57% over four years and 1.81% over five years.

All these accounts are offered from banks that are regulated by the Financial Conduct Authority and authorised to operate in the UK.

That means you are protected by the UK’s Financial Services Compensation Scheme should the bank go bust.

Now where have I sourced all these deals from? Well, the internet.

Which? runs a price-comparison site for savings accounts and Isas that will show every available deal from every available provider.

Moneyfacts.co.uk is also a useful site to use to compare and narrow down thousands of savings accounts and Isas.

If this feels like using a price- comparison site is too much for you, there is an organisation called Savings Champion, which could be useful to you.

It gives people personalised guidance on their cash savings, offering best-buy tables and a one-to-one service on cash advice.

It might be worth having an initial consultation, which is free, to see if this is a service that can support you in finding the right account for your needs.

Savings Champion can be contacted at savingschampion.co.uk or on 0800 011 9705.