Letter from the Editor: Savings rates are rising, but are you benefiting?

There’s been a lot of focus recently on what rising energy prices might mean for interest rates, and while that’s not great news for borrowers, it brings an upside for savers.

If interest rates rise, banks tend to increase the rates they offer on savings accounts and Cash ISAs. And we’re already starting to see signs of that.

In recent weeks, providers have been nudging rates upwards to attract new customers. eToro is now offering a massive 4.78% AER (variable) on their Cash ISA. That includes a boost that lasts for 12 months and it covers both transfers in and new deposits, but you will need at least £500 for new deposits and £15,000 minimum if you’re transferring in from elsewhere.

If you use our exclusive link, Trading 212 is also offering 4.68% AER (variable), with no minimum deposit and you can withdraw from it as often as you like.

If you want the security of a fixed rate and a high street name, Tesco Bank is offering 4.25% (AER) fixed for 12 months on a Cash ISA right now. On ordinary savings accounts, Chase is offering 4.5% for new customers who also open a current account. But, to be honest, as Cash ISA rates are so competitive right now, you may as well bag the tax benefits of an ISA if you’re looking to deposit up to £20,000 this year.

If interest rates rise this year, as is now predicted, you could find many other providers following suit with a rise in what they pay you to store your cash with them.

But there’s a catch.

Banks don’t always pass on higher rates evenly – or quickly. So while rising rates are good news in theory, in practice they only benefit you if you act on them.

That means checking what you’re currently earning, comparing it to what’s available, and being willing to switch if needed. It’s not the most exciting financial task — but in a higher-rate world, it can make a noticeable difference to your returns.