What is the ‘single easy access rate’ and what does it mean for you and your savings?
The 'single easy access rate' is a proposal by the Financial Conduct Authority (FCA), UK's financial regulator, aimed at making savings rates simpler to understand for consumers. Under the new proposals, banks will have to set a single easy access rate across all of their easy access accounts. Banks will still be able to offer different introductory rates, however, the rates must return to the bank's chosen 'single easy access rate' after 12 months. It is designed to simplify the savings market, making it easier for consumers to understand and compare alternative offers.
There are approximately 40 million savers in the UK that have either an easy access savings account or easy access cash ISA. According to research by the UK's largest fund platform Hargreaves Lansdown, 46% of savers don’t even know what interest rate they’re earning on their money.
What does the 'single easy access rate' mean for you and your savings?
Sarah Coles, personal finance analyst at Hargreaves Lansdown says that “The single easy access rate will mean that rather than gradual cuts, after 12 months, your bank will cut every single savings account to the same rate and keep it there. This is great news for the most reluctant switchers, who will see average rates rise from 0.55% to 0.78%."
"It’ll make things simpler for all savers, who will find it much easier to know where they stand. However, anyone other than the most reluctant switchers risks missing out. This single easy access rate is going to be low - and lower than rates tend to be after the first 12 months. So it will be essential for us all to revisit our accounts each year, and check the market for more competitive options."
Why did the FCA propose a 'single easy access rate'?
The FCA had previously stated that long-standing customers receive poor returns on their cash and that it was an issue which needed to be addressed. It said that by introducing a single rate, competition will improve as banks and building societies will have to work harder for your custom. The FCA has estimated that consumers will receive an additional £260million as a result of higher interest payments.
The new proposals also mean that banks will be required to publish the rates that they offer every 6 months making it easier for customers to compare their current deal with the rest of the market.
Christopher Woolard, executive director of strategy & competition at the FCA said, "Our proposals would mean firms have a single rate for customers immediately after their accounts have been open for 12 months. Firms will choose the rates they offer, and the rates they offer will have to be clearly published."
"We are concerned that many longstanding customers are seeing a poor outcome and we want firms to focus more on these customers. The new rate will also make it easier for savers to know whether they are getting a good deal after any introductory offer has expired."
How to compare the best savings accounts
The exact date of when the 'single easy access rate' will come into place is not yet known, however an easy way to compare the best savings accounts in the meantime is to use our best-buy savings accounts tables. Our tables compare the best regular savings accounts as well as high-interest current accounts, easy access savings accounts and many more. As well as our best-buy tables, we also explain two ways to ensure you are always getting the best savings rate.
Looking for a financial adviser near you?
Do you need financial advice? An independent financial adviser can show you how to make the most of your money.
Simply find your nearest qualified and regulated adviser using the UK’s largest adviser search.