Bank offers 4.4% savings rate guaranteed to beat interest rate cut | Personal Finance | Finance

A market leading fixed rate savings account is currently paying 4.4% interest to customers, beating the Bank of England’s (BoE) interest rate cut.

The BoE on Thursday (August 7) reduced the base interest rate by 0.25 percentage points from 4.25% to 4%, bringing it to its lowest level for more than two years. The base rate helps to dictate how expensive it is for people to take out a mortgage or a loan, but savings rates are also linked to the figure and will now be reduced over the coming weeks as a result of the cut.

Many variable and tracker savings accounts closely follow the base rate which means customers with these accounts face a drop in the amount of interest they will earn thanks to the cut. But if you open a fixed rate savings account, you won’t be affected by any drops to the base rate, so you can effectively lock into a higher rate to get better returns on what you save.

Vanquis bank is currently offering customers a one year fixed rate of interest at 4.44% AER, which is above the BoE base rate at 4%.

It is currently the best available rate on the market for a one year fix, according to Money Saving Expert (MSE), and customers can opt to have the interest paid either monthly or annually.

To open the account, customers need to be aged 18 or over, be a UK resident and make a deposit of at least £1,000 within 30 days.

After the bank receives the first payment, customers can then make one or more further deposits up to a maximum balance of £250,000 within five working days. After this, you can’t make any more deposits.

Vanquis bank said: “Interest is calculated daily. When you open the account you will be able to choose whether you would like interest to be paid each month or annually.

“You will also be able to choose whether you would like interest to be paid into your account or transferred to your nominated account. The interest rate for this account is fixed so we can’t change it during the fixed term period.”

The benefit of this account is you get to earn 4.4% of interest on your savings for a full year, with the rate guaranteed to stay at that level for that entire period. But the downside is your savings must stay locked away for the fixed term, so you won’t be able to access it within that time.

Plus, there is also the risk that if rates rise elsewhere, you will be stuck with this account until the fix ends. Once the fixed term ends, the bank will ask what you would like to do with your money and will inform you of other accounts that may be available and how to apply.

Vanquis bank adds: “You can only withdraw money from your account by paying it into your nominated account at the end of the fixed term; or in exceptional circumstances but you will have to withdraw all of your money and close your account. Interest earned will be paid at the date of account closure

“At the end of the fixed term, you can either put your money into another fixed term account or another account with us (if available); or transfer your money, including interest, to your nominated account.

“If we don’t hear from you about your preference, we’ll transfer your deposit to the highest interest easy access savings account we may have available at that time. Your money will earn interest at that rate until we receive your instructions about where to transfer your money to.

“You will be able to make further payments into this easy access savings account if you wish, subject to any maximum deposit limits for that account.”