NatWest is offering a 3% interest rate on savings – are you eligible for an account?
Martin Lewis offers advice on savings and interest rates
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Building up savings is a prudent financial decision, but more than a decade of tumbling rates has led to a low interest rate environment in the UK. Generally speaking, low interest rates make it cheaper to borrow, thus encouraging spending and investment but they also mean that savers earn less on their money.
One of the most competitive fixed rate savings accounts on the market is currently offered by NatWest.
It’s Digital Regular Saver account pays three percent gross – one of the highest according to Moneyfacts.
Customers can put between £1 to £50 per month into the account and will need to set up a standing order at account opening.
Interest is paid monthly directly into a person’s bank account.
A three percent variable rate is paid on balances of up to £1000.
Any balances above £1000 will earn 0.01 percent interest.
The Digital Regular Saver account has no withdrawal restrictions.
This means that customers have instant access to their savings.
The market-leading account is available through the NatWest app or website.
There is no minimum deposit required.
Notably, the Digital Regular Saver account is a variable rate account meaning that NatWest can lower interest rates at any time.
Another factor of key importance is that this offer also requires savers to have a NatWest current account.
NatWest has stated that during the coronavirus lockdown, more than 400,000 customers grew their savings by £100 or more for the first time.
The bank is aiming to help an additional two million customers to start saving by 2023.
In fact, more than £200billion has been put into cash savings accounts since March 2020, according to Bank of England data.
It’s important for savers to note that withdrawing money during a fixed rate period can often lead to a loss of interest.
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Fixed rate savings accounts give higher returns but require people to lock their money away for a set amount of time such as one, two, three or five years.
This is also known as a fixed term bond.
Whether people borrow money or deposit savings, how much they pay back or earn is dictated by interest rates.
Most fixed rate savings accounts are protected by the Financial Service Compensation Scheme (FSCS) which protects up to £85,000 for each person.
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