Savings provider launches new account with 4.96% interest and earns 'excellent' rating

SmartSave has launched a new fixed savings account offering a 4.96 percent interest rate, earning an “excellent” Moneyfactscompare rating.

The interest rate, which is fixed for two years, is currently topping the table in its sector.

The account is aimed at savers with larger sums to invest as it requires a minimum deposit of £10,000 to open.

However, savers can expect to see sizeable returns. To give an example of the interest the pot can amass at its current rate, a £10,000 deposit is estimated to earn £1,016.60 over two years.

Commenting on the deal, Caitlyn Eastell, a spokesperson at Moneyfactscompare.co.uk, said: “SmartSave has launched a new Two Year Fixed Rate Saver this week, paying 4.96 percent, the market-leading rate for its term.

“Savers will need to invest a minimum of £10,000 but they may be glad to see they are able to make further contributions for 14 days from the account opening.

“However, it should be noted that, much like other fixed-term bonds, earlier access is not permitted. Overall, the account receives an Excellent Moneyfacts product rating.”

While SmartSave may be offering the most competitive deal, competition doesn’t fall too far behind in the two-year fixed savings sector.

Close Brothers Savings is offering an Annual Equivalent Rate (AER) of 4.95 percent on the same minimum deposit of £10,000. Up to £2million can be invested overall and interest is paid yearly.

For those with smaller sums to invest, Al Rayan Bank is offering an Expected Profit Rate of 4.92 percent. Instead of paying interest to savers, Al Rayan Bank, as an Islamic bank, invests customers’ deposits in ethical, Sharia-compliant activities to generate a profit.

Profit rates are expected, however, the bank said it has always paid at least the profit rate it has quoted to its customers since it was founded in 2004.

Savers need a minimum deposit of £1,000 to launch the account and profit is paid on maturity. Up to £85,000 can be invested overall.

RCI Bank is also offering an AER of 4.92 percent on its two-year fixed savings account. A minimum deposit of £1,000 is required and up to £1million can be invested. Interest is paid on maturity.

Commenting on the market, Alice Haine, a personal finance analyst at Bestinvest by Evelyn Partners said that despite savings rates falling in recent months, people finally have access to inflation-beating returns.

She said: “Saving rates on regular bank and building society accounts may have retreated from the highs seen last summer, but despite a base rate cut on the horizon, the effective interest rate - the actual interest paid on new fixed accounts – rose by three basis points to 4.4 percent in April.

“With inflation on the retreat, it means far more savers are now enjoying a real return on their nest eggs with more than 1,500 savings accounts offering inflation-beating returns and several still offering rates in excess of five percent AER.

“Savings rates are expected to ease once interest rate cuts come into play, so finding the best deal to secure the biggest inflation-beating return is imperative.”