United Trust Bank won Best Notice Account Savings Provider at the YourMoney.com Personal Finance Awards 2024 – the first time it has won in the annual awards.
As part of YourMoney.com‘s special award winner spotlight series, Brian Todd, head of deposits at United Trust Bank, shares five reasons why savers may want to broaden their search away from the high street to earn more interest on their cash.
Five reasons to broaden your savings search away from the high street
You’ve worked hard to build up your savings pot, so it’s important to find the best home for it. With so many choices of banks, building societies and other deposit account providers to choose from, it’s very easy to simply go for a name you know or the bank that provides your current account.
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However, taking a little extra time to look beyond the high street could make a big difference to your returns and your experience. Here are five good reasons why broadening your savings horizons is worth a look.
1) More competitive interest rates
High street banks are often the go-to for many savers due to their long-established reputations. However, smaller savings providers frequently offer better interest rates and also offer the same Financial Services Compensation Scheme (FSCS) protection as the big banks.
For example, when we looked at the best two-year fixed rate ISAs available (as of 17 July 2024), every one of the top five were from banks you wouldn’t find on the high street. In fact, you may not have heard of some of them at all, although United Trust Bank is among them. You have to drop to 28 out of 71 accounts to find a high street bank.
A higher-paying account means your money can grow significantly faster, and making sure your savings are working hard can result in potentially hundreds of pounds more in interest each year, depending on how many savings you have, of course.
2) Personal service
Smaller savings providers often pride themselves on delivering a more personal customer service. Unlike larger banks, where customers can feel like just another number, smaller institutions may offer more tailored support and a higher level of customer care. This can include more accessible customer service advisers, faster response times, and services tailored to your specific needs.
The personalised approach can help ensure that you can manage your money the way you want to.
3) Ease of switching accounts
One common misconception is that switching savings accounts is a hassle. In reality, the process has become remarkably straightforward. Most banks and savings providers now offer online account management, allowing you to open and switch accounts with just a few clicks. Some even provide switching services that transfer your funds automatically from your old account to the new one.
This ease of switching removes a significant barrier and allows you to take advantage of better rates and terms quickly and efficiently. Remember, however, that if your money is in a fixed-term or notice account, you will have to adhere to the withdrawal terms, and moving your money early may not be possible or incur an interest penalty.
4) Diversified savings options
Smaller savings providers often offer a diverse range of savings products that can help you structure your savings more effectively, all under one roof. This might include:
- Notice accounts: For funds you may not need to get out quickly but don’t want to lock away for long periods while still earning more interest than an instant access account.
- Fixed rate bonds: Offering higher interest rates in exchange for locking away your savings for a set period from a few months to several years.
- Cash ISAs: Helping your money grow with tax-free interest on your savings.
By diversifying your savings across different account types, you can keep enough money available for your short-term needs while earning higher interest rates on funds you can afford to lock away. This portfolio approach allows you to optimise your savings, ensuring you get good returns while maintaining access to your funds when needed.
5) More security for savers with bigger pots
As mentioned earlier, many of the less well-known savings providers offer the same FSCS protection as the bigger banks. The Government-backed scheme protects up to the first £85,000 of your savings (£170,000 for joint accounts) invested with each provider subscribed to the scheme and guarantees that money in the event that the bank collapses.
If you have a large amount of savings, it’s worth considering sharing it around several banks with their own licences to protect all of your money. Be careful, though, as some banks that might appear to be different entities may actually be part of the same group and share protection. For example, Halifax and Bank of Scotland are part of the Lloyds Banking Group, and while Lloyds has its own protection, Halifax and Bank of Scotland share protection.
This means that if you have £85,000 with Halifax and £85,000 with Bank of Scotland, only £85,000 would be protected if the group collapsed. The MoneySavingExpert website has a useful tool that helps you check which banks and building societies are linked and how it affects FSCS protection.
Brian Todd is head of deposits at United Trust Bank
United Trust Bank (UTB) is an expanding and customer-focused UK specialist bank that provides a wide range of award-winning deposit accounts for individuals, education providers, businesses and charities.
Its choice of savings products includes over 70 fixed-term, notice and Bank of England base rate tracking accounts and all the time benefit from the protection and peace of mind provided by the Government’s FSCS.
