SAVINGS choice is at a record high but experts have warned rates are falling with one saying: “You have to keep on your toes to secure the best rates.”
The latest Moneyfacts UK Savings Trends Treasury Report shows savers now have more choice than ever before, but they should be cautious of falling rates.
Overall product choice rose by its biggest margin since June 2023 to 2,394 savings deals, including ISAs, which is the highest on our records.
Excluding ISAs, product count rose to 1,726, the highest number of non-ISA products in more than 16 years – since November 2009. The choice of cash ISAs rose for the third consecutive month to 668 deals from 657, the highest on record.
But rates are falling. The average easy access rate fell to 2.41%, its lowest since July 2023.
The average easy access ISA rate fell by 0.11% to 2.58%, its biggest fall since January 2025 and lowest since July 2023.
The average one-year fixed rate fell to 3.81%, its lowest since April 2023. The longer-term average fixed rate fell to 3.79%, its lowest since November 2022.
The Moneyfacts Average Savings Rate has fallen from 3.35% to 3.31% for February, the lowest figure since May 2023. Over the past year the rate has fallen from 3.69% to 3.31%.
Savers now have more choice than ever
Caitlyn Eastell, Personal Finance Analyst at Moneyfacts, said: “Savers now have more choice than ever before as the number of products and providers reach record-highs. Lesser-known banks help the market grow and can be a source of innovation as they typically need to compete harder for savers’ hard-earned cash. However, many average rates continue to fall across the board.
“Variable ISAs and non-ISAs are now at their lowest levels in almost three years, while most fixed rates are at their lowest in almost three years, except for long-term non-ISAs which are at their lowest in four. It would not be surprising if the fading rate environment leaves savers disheartened, but it’s vital that they do not give in to apathy as they can still get over 4% on the most competitive accounts.”
Philly Ponniah, Chartered Wealth Manager and Financial Coach at Philly Financial, said inflation eats away at savings sitting in a low interest rate account.
She added: “Savers may have more choice than ever, but they need to tread carefully as rates continue to fall. Averages are sliding quickly, easy access is down at 2.41% and one year fixes have dropped to 3.81%. That tells you banks expect rates to soften further. If you are waiting for rates to bounce back, you may be waiting a while.
“ISA season will bring enticing bonuses, but many are short-lived. The real winners are savers who treat this like a review cycle, not a one-off decision. With tax bands frozen and allowances shrinking in real terms, cash ISAs are becoming more important for anyone close to their Personal Savings Allowance.
“It is also worth remembering that cash is for short-term goals and emergency funds. Over time, inflation quietly eats away at the real value of money sitting in savings. For longer term wealth building, a stocks and shares ISA can give your money a better chance to grow above inflation.”
Rates continue to fall
Ross Lacey, Director & Independent Financial Adviser at Rayleigh-based Fairview Financial Management, warned against fixed rate savings accounts.
He added: “It’s not surprising to see fixed savings rates falling given the direction of travel on fixed rate mortgages. Over the past couple of years for many people, savings rates have felt compelling, particularly compared with preceding years.
“However, context is everything and although there will always be years where cash savings offer a return above inflation and investments, these are exceptions rather than a trend to expect over the long term. It still makes sense to hold a certain amount of cash as part of a structured financial plan, but we tend not to recommend fixed rate accounts, as cash is designed for easy access and liquidity.”
Riz Malik, Director at Southend-on-Sea-based R3 Wealth, said cash should only be there for emergencies.
He continued: “As we come to the end of the tax year, financial institutions whip up a frenzy to try and increase their savings book. However, cash savings are great for emergency needs and upcoming expenditure, but as an asset class struggles to keep up with inflation.
“Too many people focus solely on cash savings returns when they have bigger gaps in their financial planning that would have much greater impact on their overall wealth. Pick your priorities carefully.”
You have to keep on your toes to secure the best rates
Scott Gallacher, Director at Leicester-based Rowley Turton, said many have cash sitting in accounts with just a 1% interest rate.
He added: “As we approach the end of the tax year, the usual ISA rush explains the surge in product choice. But while choice is at record highs, rates are sliding, and complacent savers will pay the price.
“Billions still sit in older accounts paying around 1%, which in real terms means many are going backwards. On £20,000 of savings, sticking at 1% instead of 4% costs around £600 a year — that’s the price of doing nothing.”
Rob Mansfield, Independent Financial Advisor at Tonbridge-based Rootes Wealth Management, said you need to be ready to move your money to a better rate.
He continued: “With interest rates falling back to July 2023 levels but record numbers of accounts available, it suggests banks and building societies are favouring gimmicky features rather than offering simple accounts with decent rates of interest.
“You have to keep on your toes to secure the best rates or risk inflation nibbling away at your hard earned savings.”
Samuel Mather-Holgate, Managing Director & IFA at Swindon-based Mather and Murray Financial, said you need to shop around for the best deal.
He added: “Choice may be at record highs but rates are tumbling and savers need to be on their guard. If you really do need to keep money in cash, do your research or get your financial adviser to do it for you, as the difference between the best and worst accounts can be quite noticeable.”
Photo by Alexander Grey on Unsplash.
