Savings rates hit 5%: Raisin launches SIX market leading deals

The products featured in this article have been independently selected by specialist journalists at This is Money. If you open an account through links marked with an asterisk, This is Money earns an affiliate commission. We will not allow this to affect our editorial independence.

Savers can now get 5 percent when they put their money in the bank, as long as they’re willing to be stuck for a year or more.

Savings platform Raisin announces today that it has launched a bank on its platform six savings deals – all paying 5 percent*, with deposits fully protected by the UK Deposit Guarantee Scheme, up to £85,000 per person.

The central bank of it all, Işbank, offers a one-year lump sum and pays 5 percent — the highest one-year interest rate since January 2009, according to Moneyfacts.

Someone who puts £10,000 into this account can expect to earn £500 in interest over the 12-month period.

Işbank is also offering five other deals for savers who prefer to be tied down for longer – all paying 5 percent.

This means savers can lock in for two, three, four, five or even seven years and secure a rate of 5 percent in the process.

Someone who commits £10,000 at a rate of 5 per cent over a seven-year period will earn £3,500 in interest over that period.

Savers need a minimum of £5,000 to open any of the deals with deposits protected at Işbank up to £85,000 per person under the Financial Services Compensation Scheme.

All accounts have interest calculated daily and deposited annually into a client’s Raisin account. From there, they can either transfer to another savings deal or back to their bank account.

Experts are urging savers to seriously consider these rates, as they may not be improved, nor will they be available for long.

Anna Bowes, co-founder of the website, Savings Champion, says: ‘As things stand, markets expect the base rate to peak at 5 percent, so this is a hugely competitive rate.

“Based on market forecasts, I’m not sure many will compete and this bond is unlikely to be available for long – certainly not for the shorter maturities.”

With the Bank of England, the OBR and even the Prime Minister all forecasting inflation to fall dramatically later this year, savers are also advised to consider long-term deals in case interest rates fall in the future.

However, savers would be wise to remember that fixed rate deals do not allow withdrawals before maturity, except in exceptional circumstances, such as if an account holder dies, becomes mentally incapacitated or goes bankrupt.

Bowes added: “With inflation expected to fall over the next six months according to [former Bank of England chief economist] Andy Haldane, locking in for the longer term could be a very sensible move.

“If inflation gets much closer to the 2 percent target, you could find yourself earning close to or even above inflation for much of the term.

“Of course nothing is certain, so a balanced approach could give more peace of mind, because once you’re stuck with a fixed-rate bond, you can’t access it until it reaches maturity.”

The new best buy is available through online savings platform Raisin UK.

How can you apply?

To open one of these accounts, depositors must sign up online through the Raisin UK platform.

There is also a smartphone app from Raisin for those who prefer to manage their finances through their mobile phone.

Raisin operates as a savings marketplace. This allows savers to manage all their savings through one online account.

Users can open multiple savings accounts with numerous different banks as and when they need to, without the usual form filling and administration.

What is Isbank?

Founded in 1924, Işbank has continued to grow and became Turkey’s largest private bank, according to Raisin UK.

It offers business and personal banking services and had approximately 9.2 million digital customers as of 2020.

Raisin’s website states that customers can open as many savings accounts as they want and manage everything under one roof

The FSCS protects deposits into savings accounts offered by Işbank through the Raisin marketplace as Işbank Ltd is fully authorized and regulated by the UK Prudential Regulation Authority and Financial Conduct Authority.

Işbank Ltd is listed on the FSCS website under their legal name in Turkish, Turkiye Is Bankasi AS.

Watch your personal savings

The downside of rising savings interest rates is that more and more savers are becoming taxable.

While most Brits have a personal savings allowance that gives them an initial buffer, anyone with a lot of savings is now likely to surpass it.

Base rate taxpayers can earn interest of up to £1,000 before paying tax, while higher rate taxpayers can get up to £500 tax free.

A higher-rate taxpayer who puts his extra money into Işbank’s one-year fix and pays 5 per cent only needs to deposit more than £10,000 to exceed his allowance. A basic rate taxpayer can deposit £20,000 before becoming a tax resident – of course, this assumes he has no savings elsewhere.

Anyone concerned about going over their personal savings should consider using their £20,000 annual Isa allowance.

Although the rates are slightly lower, a cash Isa protects any interest the taxpayer receives.

– Check out the best cash Isa rates here.