Top savings rate from Atom Bank now offers 5%

Savers can now earn 5 percent for the first time in nearly 11 years, after Atom Bank launched a new five-year fixed-rate best-buy deal.

The five-year fix from the online challenger bank is the highest-paying savings account since February 2012, according to Moneyfacts.

Savings interest rates have risen in the past year. In recent months, however, rates appear to have been turbocharged.

>> View our independent table with the best savings rates.

Just three weeks ago, we reported that the best fixed savings rate had crossed the 4 percent mark.

Atom’s deal charges interest daily and pays out monthly. Savers can choose to have interest deposited into their account or deposited into their designated bank account at another bank or mortgage bank. If you choose the latter, you will receive slightly less interest in total.

Someone who deposits £10,000 into this account can expect to earn £2,763 in interest over the five-year period.

Meanwhile, depositing £50,000 into this account would mean £13,814 in interest after five years.

It is worth pointing out that based on the current inflation rate of 9.9 percent, the savings set at 5 percent are still losing value in real terms.

Savers can open the Atom fixed rate account by signing up via the mobile app and depositing £50. They can then save up to €100,000.

Savings at Atom are protected by the Financial Services Compensation Scheme up to £85,000 per person.

Do you have to sign up?

Savers will be tempted by the general rate and the fact that it’s been so long since we last experienced a 5 percent savings deal.

This account is only attractive to savers who want to block their money for a long period of time.

Rachel Springall, a personal finance expert at Moneyfacts, says: “savers who feel insecure about the broader markets with their investments may be tempted by a 5 percent savings rate guaranteed for the next five years and the highest fixed bond yield. that we know. seen in a decade.

“As it stands, there may be further improvements in the fixed bond market, but as we’ve seen before, market leading interest rates don’t always last very long as they can be subscribed very quickly.

“If savers feel they need their money sooner, it may be wiser to spread it over a shorter fixed bond and an easily accessible account – but also consider an Isa benefit or personal savings allowance they have with rising interest rates.” to protect their savings interest from tax.’

Coventry Building Society has a new one-year fixed bond that pays 4.4% with a minimum deposit of £1 and is available online, by phone, post or in the office

As a long-term investment, some savers consider a 5 percent commitment for five years to be a safe bet given the current economic climate.

While savings rates still lag behind headline inflation, they’re starting to compare fairly favorably with the annual payouts of income funds and mutual funds, with the FTSE 100 yielding about 4 percent.

Depositors who withdraw cash won’t benefit from potential gains from rising stock prices, but a 5 percent interest rate return is an almost risk-free option when held in an FSCS-protected savings account, while investing in the stock market carries the potential for investment both fall and rise in value.

Mike Stimpson, partner at asset manager Saltus: ‘Fixed deposits offer a relatively safe return. We always consider whether a client’s goals can be achieved with safe investments before recommending something more risky.

‘However, the customer’s circumstances are changing. Many want to have capital in the short term or bend their income up or down. These objectives are unlikely to be achieved with fixed deposits, but with an investment portfolio.

“We also recommend considering all tax regimes, including capital gains, dividends and interest on savings.

‘In addition, many of our clients invest in order to be able to spend more on their retirement or to pass on to loved ones, which may be better with a diverse investment portfolio.’

There is another important factor that can hold back savers. Savings rates continue to rise and the pace of chance does not appear to be slowing either.

Yesterday, Santander launched a new best-buy easy-access deal that paid 2.75 percent, while Coventry Building Society launched this morning a range of one-year, two-year and three-year fixed-rate options that paid between 4.4 percent and 4.85 percent.

Essentially, savers can get a fix for two years less than this Atom deal and lose 0.15 percentage point in interest.

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According to Moneyfacts, the average savings rate has increased approximately fivefold over the past 12 months from 0.18 percent to 0.99 percent.

The one-year fixed interest rate also rose from 0.76 percent to 2.68 percent during that period.

It is therefore likely that many savers will adopt a wait-and-see attitude, assuming that even better deals are yet to come.

Anna Bowes, co-founder of Savings Champion says: “This is another breakthrough with a bond paying 5 percent – the first time in over a decade.

That said, few people will want to lock in their money for 5 years while seeing interest rates continue to rise.

‘We will only know afterwards whether it is wise to take advantage of this rate now.’