A RECORD-BREAKING savings market is boosting choice, research shows – but experts have urged people to shop around for best deals saying “loyalty rarely pays”.
Overall product choice has beaten all-time highs for a sixth consecutive month, rising to 2,583 savings deals including ISAs, according to Moneyfacts.
Excluding ISAs, product count rose to 1,853, the highest number of non-ISA products on record. The number of cash ISAs fell for a second month and now stands at 730.
The average easy access rate rose by its biggest margin since October 2023 to 2.53%, the highest rate in almost a year. The average easy access ISA rate fell to 2.72%, while the average notice ISA fell to 3.33%.
The average one-year fixed rate rose to 4.22%, its highest since November 2024. The longer-term average fixed rate jumped to 4.24%, its highest figure in over two years.
The average one-year fixed ISA rate fell for the first time in five months to 4.21%. The longer-term fixed ISA rate held steady at 4.22%, its joint highest since January 2024.
Encouraging
Caitlyn Eastell, Personal Finance Analyst at Moneyfacts, said: “Savers have reason to be encouraged as competition across the savings market shows no signs of slowing. While savers are winning, for providers, the intensifying competition means the cost of attracting and keeping savers’ money is rising, putting more pressure on margins. However, this may be necessary, particularly for providers looking to support any lending activity and manage their funding.
“The good news for savers continues, many savings rates continue to rise and reach multi-year highs. The current condition of the savings market strongly favours active savers. Regularly reviewing and switching accounts can make a meaningful difference to how quickly savings grow, helping savers benefit from the most competitive rates available. Those who leave money sitting in older or lower-paying accounts risk missing out on hundreds of pounds in potential interest.”
Paul Denley, CEO at London-based Oakham Wealth Management, offered some advice for savers.
He said: “Competition in the savings market is intense. Record product choice and nearly 1,400 accounts paying above Base Rate mean providers are fighting hard for deposits – and savers should take advantage. The biggest danger is inertia: loyalty rarely pays in savings. Shop around, keep an emergency fund accessible and consider fixing money you will not need for a year or more.
“With one-year and longer term fixed rates both around 4.2%, there is currently little reward for locking money away for several years and sacrificing flexibility. Savers should also watch the tax position. At today’s rates, it takes far less cash to use up your Personal Savings Allowance, so a slightly lower ISA rate could still leave you better off after tax. The worst thing savers can do is leave cash languishing in an uncompetitive account.”
Competition is intense
Rob Mansfield, Independent Financial Advisor at Tonbridge-based Rootes Wealth Management, said savers should look into investing instead.
He added: “Whilst the choice is wide, are they really competing for your money? I think this data shows that the population are demanding cash products, and savings providers are lapping it up. This is despite the government’s best efforts to try and encourage people into investing.
“Savers should think about their long term goals. If this money is for a holiday or a new sofa then cash works fine but if it’s for longer term savings, is cash providing enough or are you missing out on other opportunities?”
Nouran Moustafa, Practice Principal & IFA at Roxton Wealth, said you need to make your money work.
She added: “It is a good time to be an active saver, but not a passive one. Record product choice sounds positive, yet 2,583 deals can create more confusion than value. The real story is the widening gap between people who regularly move their money and those leaving cash in poor-paying legacy accounts.
“Fixed rates above 4% are attractive, but savers should not lock everything away simply because the headline looks strong. Keep an accessible emergency reserve, then consider splitting the rest across different terms so all the money does not mature at once.
“Also compare the net return, not just the rate: a taxable account paying slightly more than an ISA may leave some savers worse off once their Personal Savings Allowance is used. My advice is simple: audit every savings account, check when bonuses expire, use ISA allowances where tax matters, and do not reward provider inertia with your loyalty.”
More than ever
Anita Wright, Chartered Financial Planner at Ribble Wealth Management, said inflation being so high means that savers aren’t making money.
She added: “There are more savings accounts than ever. But counting products is not the same as counting value. A record number of ways to lose money slowly is still a record number of ways to lose money slowly. The average easy access account pays 2.53%. Against inflation and after tax, the saver is going backwards politely, with excellent customer service and a choice of 2,583 doors to walk through.
“All those extra accounts tell you something. Banks compete on product count when they don’t want to compete on price. Choice becomes the distraction. Is it a good time to be a saver? It’s better than it was. Use the full ISA allowance while you can. But recognise what you’re doing. You’re not building wealth. You’re slowing its erosion.”
Graham Nicoll, Financial Planner, Chartered FCSI at NCL Wealth Partners, said loyalty doesn’t pay.
He added: “The increased competition is good news for savers, but it is worth understanding what is driving it. Banks and building societies are competing harder for deposits, managing funding needs and responding to customers becoming more willing to switch. It is not simply about providers being more generous.
“For savers, this is a reminder that loyalty does not always pay. Shopping around can make a meaningful difference, but don’t focus only on the headline rate. For larger cash balances, consider FSCS protection limits, which generally cover up to £120,000 per person, per authorised banking group.
“However, spreading money too widely can create an administrative headache for you and your family. Good financial housekeeping matters: review your accounts regularly, consolidate where sensible, and make sure someone trusted could understand your finances if you were unable to manage them.”
Scott Gallacher, Director at Leicester-based Rowley Turton, shared the biggest mistake savers can make.
He added: “Record product choice is excellent news for savers because competition generally leads to better rates. The problem is that many people remain in savings accounts paying next to nothing, often because they haven’t reviewed them for years. The biggest mistake isn’t choosing the second-best savings account. It’s leaving your money in the worst one.”
