Wednesday, April 24, 2024
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Paragon Bank has introduced a best buy easy-access savings account boasting an interest rate of 5.25% AER (variable). Although this rate doesn’t outpace the current inflation rate of 6.7%, it matches the Bank of England’s base rate, which has remained stable at 5.25% following several interest rate hikes.

The savings account, initially launched in July, has witnessed multiple rate increases, with the most recent bump occurring in September when it jumped from 4.75% AER to 5.05% AER. Due to its immense popularity, the September rate increase was withdrawn after just three weeks.

This savings account, which offers both easy access and double access, allows two withdrawals within a 12-month period before incurring penalties. Should a customer exceed this limit, the interest rate drops to just 1.5%.

To open a Paragon Bank savings account, you can start with a minimum deposit of £1,000 and save up to a maximum of £500,000. However, only deposits up to £85,000 are protected by the Financial Services Compensation Scheme (FSCS). Customers must initiate their initial minimum deposit within 28 days of opening the account, or the account will be closed. If the account balance falls below £1,000 at any point, it will also be closed.

Since the rate is variable, it can change over time. If the rate increases, customers will receive notifications as soon as possible, though this may occur after the rate change takes effect. Conversely, if the rate decreases, customers will be notified 14 days in advance.

Paragon Bank has indicated that this new rate on its Double Access Saver account is available for a limited time, which typically means it may be withdrawn once the account reaches capacity.

For those seeking alternatives, there are other easy-access accounts with minimal interest rate differences, such as the Beehive Money Limited Issue Easy Access account, which offers a 5.2% interest rate with unlimited withdrawals and a minimum £1,000 deposit requirement.

Highly competitive one-year fixed savings accounts with rates exceeding 6% are also available for those willing to lock in their savings. Additionally, opening an ISA may be worthwhile for those with savings under £20,000, as it provides tax benefits.

In the volatile economic environment with rising inflation, the availability of high-interest savings accounts offers consumers an opportunity to secure their funds while maintaining access for rainy-day needs.

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