How to micro-fix your savings and maximise your returns in time for Christmas
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Savers can now get up to 5 percent on their savings when they microfix, thanks to a new wave of shorter-term, fixed-rate contracts.
Most fixed-rate savings agreements have terms of one to five years, meaning savers must be prepared to store cash for long periods of time.
However, this new wave of short-term solutions means savers can now access fixed-rate deals for terms ranging from nine months to just three months.
Micro-fix: Savers now have the option to lock in their interest for as little as three months and beat the best easily accessible rates in the process.
Some of the best short-term solutions can be found on savings platforms such as Raisin UK* and that of Hargreaves Lansdown Active saving.*
Savings platforms act as a kind of marketplace and allow savers to manage multiple accounts in one app or online account.
The two best deals are currently being offered by Al-Rayan Bank, via Raisin UK.
Both accounts require a minimum deposit of £5,000 and no withdrawals can be made until maturity.
All deposits made are protected under the Financial Services Compensation Scheme up to £85,000 per person.
The six-month best fix pays 4.9 percent, while the nine-month best fix pays 5 percent.
However, savers can also consider the best three-month solution, currently offered by GB Bank, with 4.11 percent paid through the Raisin platform.
The best longer term fixed rate savings deal is paying 5.35 percent, while savers can get 3.85 percent on an easy access.
– View the best savings deals for fixed rates here.
Someone who deposits £10,000 into Al Rayan’s six-monthly account through Raisin can secure £245 in time for Christmas.
Someone who opts for the slightly longer nine-month period and pays 5 per cent could earn £375 in interest on a £10,000 deposit, in time for Easter.
Meanwhile, someone who puts £10,000 into the quarterly fix and pays 4.11 per cent will earn £102 in early September.
It also offers a potential middle ground between easily accessible savings rates and fixed rates for those savers who are concerned about not being able to access their money for a year or more, as is normal with fixed-rate deals.
The best online easily accessible deal pays 3.85 percent. A person who puts £10,000 into this account will earn £96 over three months, £192 over six months and £288 over nine months.
– Check out the best easily accessible savings rates here.
Rock solid returns: Micro-fixes offer guaranteed interest for anywhere from three to nine months.
What savers decide to do will likely depend on what their expectations are for interest rates.
James Blower, founder of the Savings Guru, says: “The markets are now pricing in a high probability that the base rate will hit 5.5 percent, so the 5.31 percent on a one-year fix seems like a better bet.
“But if savers don’t think we’re going that high, it’s hard to argue against 5 percent for nine months.
“The 4.9 percent for six months is a good bet if you think it’s going to get a lot worse, and rates are rising above 5.5 percent, like if you’re right, chances are you’ll be able to then to solve the problem. at higher rates at the end of the year.
“We believe a risk-free rate of return of 5 percent is excellent, so it’s worth considering.”
Who are Al Rayan Bank and GB Bank?
Established in 2004, Al Rayan Bank is the UK’s oldest and largest Islamic bank, serving over 85,000 customers across the country.
As an Islamic bank, instead of paying interest to depositors, Al-Rayan Bank invests customers’ deposits in ethical, sharia-compliant activities to generate profits.
Earnings rates are expected; however, since the Bank’s inception in 2004, it has always paid its clients at least the rate of profit it has quoted.
GB Bank received its full UK banking license in August last year. It is a specialist bank that specializes in providing flexible financing solutions to SME real estate developers for both commercial and residential developments.
It claims every penny saved from it will help support regional, community development in the UK.
Similar to Al Rayan Bank. deposits are eligible for protection by the Financial Services Compensation Scheme (FSCS)
The FSCS is the UK’s statutory deposit guarantee scheme that covers deposits in individual savings accounts of up to £85,000.
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