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Barclays confirms 'competitive' interest rate rise for savers - does it beat inflation?

Daily Express logo Daily Express 04/10/2022 Patrick O'Donnell
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The bank has launched a new instant access savings account which is available to its existing customers. This latest offering from Barclays offers a "competitive" rate of around five percent to those who are eligible. However, concerns have been raised as to how "competitive" this rate is as inflation continues to be an issue for many people.

The Rainy Day Saver gives Barclays' Blue Rewards customers a rate of 5.1 percent AER per year variable for balances up to £5,000.

Specifically, this savings account was created to assist customers in building a savings fund to manage an unexpected expense or cost.

As well as existing Blue Rewards customers, those who chose to join will also be able to claim this five percent interest rate.

Other benefits from the account include monthly cash rewards on products such as mortgage, insurance and loans.

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Man on phone and Barclays © GETTY Man on phone and Barclays

David Kelly, the head of Savings at Barclays, shared why the bank is opting to hike interest rates during the cost of living crisis.

Mr Kelly explained: "Customers are looking for ways to build their savings, and the Barclays Rainy Day Saver helps them to create an instant access emergency fund with a headline rate for balances up to £5,000.

"The Barclays Blue Rewards scheme is designed to help people make their money work harder with access to exclusive savings products.

"It sits alongside Barclays highly competitive fixed rate bond and ISA options, which are available to all, helping customers to save more."

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This latest intervention from Barclays comes during the cost of living crisis which has seen inflation skyrocket and diminish the returns on savings accounts.

Currently, the UK's inflation rate is at 9.9 percent which is slightly below the rate from the month before but remains at a reasonably high rate.

To address this concern over inflation, the Bank of England has raised the country's base rate to 2.25 percent.

Banks and building societies have passed on this rate increase to their customers, with Barclays being one of them.

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Interest rate graph © EXPRESS.CO.UK Interest rate graph

Sarah Coles, a senior personal finance analyst at Hargreaves Lansdown, shared her concern for the interest rate of savings accounts as inflation continues to rise.

Ms Coles explained: "Sticking with a familiar and unrewarding account is an expensive mistake to make, especially at the moment while inflation is running rampant.

"We can't afford for our money to be languishing in savings accounts paying a small fraction of a percent.

"It means we all need to revisit our savings and find out just how much we're making on our money. And if we're with a high street bank paying a miserable rate, we need to switch."

ISA explained © EXPRESS.CO.UK ISA explained

The tax expert noted that high street banks "aren't delivering" the way they should amid soaring inflation.

She added: "The kinds of rates people are expecting to earn on easy access aren't unreasonable.

"Rapidly rising rates mean that right now, it's possible to earn more than two percent on easy access savings.

"It's just that the high street giants aren't delivering, so if you want these kinds of rates, you really do need to move to a smaller or newer alternative."

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