Savings provider increases interest on fixed account to 5.2% and earns 'excellent' rating

Close Brothers Savings has increased the interest rate on its one year fixed account to 5.2 percent, earning an “excellent” Moneyfactscompare rating.

The savings account is aimed at those 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 £520 over the course of a year.

Commenting on the deal, Caitlyn Eastell, a spokesperson at Moneyfactscompare.co.uk, said: “Close Brothers Savings has increased the rate on a selection of its fixed bonds, including the One Year Fixed Rate Bond this week, paying 5.2 percent.

“The rise improves its position in the market when compared against other bonds of similar terms.

“Savers will need to invest a minimum of £10,000 and further additions can be made for 10 days from the account opening which may be a bonus; however, it is worth noting that early access is not permitted. Overall, this deal earns an Excellent Moneyfacts product rating.”

While Close Brothers Savings may be offering a more competitive rate, it isn’t quite topping the table. Mizrahi Tefahot Bank Ltd, offered through Raisin UK, boasts an Annual Equivalent Rate (AER) of 5.25 percent.

Savers need a minimum deposit of £1,000 to launch the account and up to £85,000 can be invested overall. Interest is paid on maturity and withdrawals are not permitted until this date.

FidBank UK Limited, which is also offered through Raisin UK, places just behind with an AER of 5.24 percent.

The account can be opened with a minimum deposit of £1,000 and up to £85,000 can be invested overall. Interest is also paid on maturity and withdrawals are not permitted.

Cynergy Bank is offering a competitive 5.23 percent AER for savers with larger deposits to invest. A minimum of £1,000 is required and up to £1million can be held in the account. Interest is paid on maturity and withdrawals are not permitted until this date.

Commenting on the market, Alice Haine, a personal finance analyst at Bestinvest by Evelyn Partners, said: “With a [Base] rate cut potentially imminent, hunting out the best deal while you still can is imperative, as is considering how tax-efficient your savings are.

“The Personal Savings Allowance has remained the same for eight years and is, therefore, more easily exceeded by the significantly higher bank and building society savings rates of late, which is why a more tax-efficient option such as ISA or pension is a sensible move for savers wanting to protect their nest eggs from the ravages of tax.”

Ms Haine added that tax paid on savings interest can “cancel out” the more lucrative position many savers currently find themselves in where inflation of two percent is easily surpassed by accounts offering the top savings rates, delivering an inflation-beating return.

Ms Haine continued: “HMRC is expecting to rake in up to £10.4billion in revenue from tax on savings interest this financial year, a sharp increase on the £6.6billion collected in the 2023-24 tax year, as more savers get caught out by high savings rates and a static Personal Savings Allowance.

“Adults can save or invest up to £20,000 in an ISA with all income and gains protected from tax. For those wanting to stash money away for the longer term to fund their retirement, then topping up their pensions is also a tax-efficient move as any contributions receive tax relief at the savers’ marginal rate of tax.”