first direct is increasing interest rates on savings next week after unveiling 7% rate

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Yesterday, first direct announced it would increase its easy access savings rates: the bank's Savings Account and Bonus Savings Account products. This follows the bank's decision last month to hike the interest rate of its Regular Saver Account last month from 3.50 percent to seven percent. Many banks and building societies have raised their rates in a bid to support savers in a time of soaring inflation.

Following this move from first direct, the Savings Account will see its interest rate jump from 0.65 percent to 0.90 percent.

Furthermore, first direct's Bonus Savings Account will also see its interest rate raised from 0.65 percent, excluding bonuses, to 0.90 percent.

This account pays a 2.60 percent rate on balances of up to £25,000 and one percent balances higher than £25,000, including bonuses.

These changes to the bank's interest rates will be applied next week on Thursday, February 2, 2023.

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Prior to this hike announcement, first direct also increased the rate of four other savings products, including its One Year Fixed Rate Saver and Cash ISA.

It should be noted that first direct's Regular Saver account is only available for existing 1st Account customers.

Any new customers who want to receive this favourable interest rate will need to open a 1st Account before they are then able to open this savings account.

Both new and existing customers of the bank must apply for the account online to access the Regular Saver account.

The seven percent interest rate for the account will be fixed 12 months from when the account is opened.

Any interest accumulated from the Regular Saver will be calculated daily and paid on the anniversary of the account being opened.

Customers who choose this particular savings product can save between £25 and £300 a month.

However, customers are unable to make partial withdrawals, and any account closures processed before the account's year-long period will mean only the savings account variable rate will be paid.

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Outside of the savings rates, the bank's customers are able to benefit from the £175 cashback to all new customers who switch to a 1st Account with the bank.

The cashback bonus is readily accessible to any new customers who switch their full banking to first direct.

This can be carried out using the Current Account Switch Service (CASS) and customers have to pay in at least £1,000 within three months of account opening.

Chris Pitt, the CEO of first direct, highlighted how this latest rate hike will support savings in the coming months.

He explained: "In the current climate, it's important for our customers to receive a competitive rate on their savings whatever their needs.

"This latest round of rate increases will ensure better value for those customers who want easy access to their money.

"We would encourage anyone who is able to commit to saving a regular amount each month, which can be as little as £25 a month, to consider opening our Regular Saver Account.

"This account offers a market-leading rate at seven percent and allows people to build up a savings pot, whilst receiving a very competitive return."