With huge sums sitting in bank and building society savings accounts, this week there were some slivers of good news for those looking for a half-decent return on their money.
Yorkshire building society said that almost 1.7 million customers would benefit from its decision to plough £16m into boosting interest rates for its savers.
It said interest rates on many accounts would be increased by 0.2%. Because the aim is to reward “loyal members”, they need to have been opened before 29 January 2021 to be included in the changes.
The society said it was automatically updating all qualifying accounts, which include Internet Saver, Access Saver and Triple Access Saver.
It has also launched the Loyalty Six Access Saver account, which pays a variable interest rate of 0.65% on balances up to £50,000. The account lets customers withdraw money on up to six occasions a year without penalty, and can be opened with a minimum of £1. To qualify, you need to be a Yorkshire member who opened an account or took out a mortgage before 1 January 2020.
Other providers that have announced moves include BLME (Bank of London and the Middle East), which has increased expected profit rates on a number of its fixed-rate accounts. Over a one-year term, it is now paying 0.8%, and over two years the rate is 1%.
Large amounts of lockdown savings cash have accumulated in many people’s bank and building society accounts over the last year or so. The total amount of “excess savings” – the additional sums saved since the pandemic began – has risen to £168bn, according to calculations by Samuel Tombs, the chief UK economist at Pantheon Macroeconomics. The economy will overheat if households spend a significant portion of this cash pile, he says, although he adds that by and large, they “aren’t confident enough yet to splurge”.