SmartSave launches best buy savings fix of 5.41%

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.

SmartSave has become the latest bank to take the top spot in This is Money’s independent best-buy savings tables with a fixed term of one year.

In an incredible 24 hours, Investec launched a top rate of 5.35 percent.

Than, Al Rayan came in at 5.36 percent; OakNorth Previously 5.37 percent Zopa and SmartSave briefly topped the list with rates at 5.38 percent.

than today, Atom launched a market-leading 12-month deal and paid 5.4 percent, a leap ahead of the competition – previously SmartSave came in with a 5.41 percent deal, becoming the seventh-best buy in two days.

Those opening the SmartSave account must do so with a minimum of £10,000 – a relatively high opening balance for a fixed account. The account can be opened online.

Atom Bank’s deal requires savers to sign up through the mobile app with their smartphone, which takes about 10 minutes. They can then get started with just £50 and deposit up to a maximum of £100,000.

Money held at Atom and SmartSave is covered by the Financial Services Compensation Scheme (FSCS), meaning deposits are protected up to £85,000 should anything happen to the bank.

Someone who deposits £10,000 into SmartSave’s one-year deal will earn £541 in interest over the course of the year.

Remember that savers who exceed their personal savings deduction may have to pay tax on part of the interest earned.

Currently, base rate taxpayers can earn up to £1,000 in savings interest without paying tax, while higher rate taxpayers get a £500 allowance. Extra taxpayers get nothing.

In addition to the one-year fixation, Atom Bank has also been launched two micro fixes.

A six-month deal pays 4.8 percent and a nine-month deal pays 4.95 percent.

Someone putting £10,000 of cash into the six-month deal could earn £240 in interest in time for Christmas.

Some of the best “micro-fixes” are also available through savings platforms.

For example, savers can get 4.9 percent for one Six-month fix through Raisin’s platform* or 4.96 percent through Hargreaves Lansdown’s savings platform, Active Savings.*

How high will the rates go?

This is the question that probably preoccupies many a saver. The one-year average fix has risen from 3.84 percent to 4.38 percent since early April.

There seems to be a new best buy weekly and often daily. Longer-term solutions have also seen some big moves.

Much will depend on how high inflation turns out to be in the coming months, and how willing the Bank of England is to raise key interest rates to keep it up.

Although inflation fell to 8.7 percent in the 12 months to April, it did not fall as much as financial markets had predicted.

This led to a widespread belief that we are heading for further rate hikes.

James Blower, founder of savings website Savings Guru says: ‘It’s incredibly difficult to predict where prices are going.

“Earlier in the year, the forecasts were that the base rate would peak at 4.5 percent, while markets now believe it is likely that it could rise to 6 percent next year.

“That drives up the fixed rates as banks respond.

Rates will continue to rise if we continue to get bad news on inflation and the economy, but they will fall if it looks like base rate hikes are working.

“My view is that we probably have a bit more to go now and that Base will move higher than expected in the coming years and will continue to do so.

“It’s hard to guess the markets, so I’d suggest that if savers are happy with the rates offered, they take them.

“With a one-year fix paying 5.4 percent, a 5.45 percent deal available for two years, and now a three-year fix paying as a risk-free rate of return, it’s certainly tempting to fix right now.”