19 Apr 2024

Banks increase use of bonuses to boost rates

Banks and building societies are continuing to add ever bigger bonuses to their savings accounts as a temporary measure to increase the rates offered to savers.

In the last two years the percentage of variable rate savings accounts including a bonus has increased from 10.8% to 16.4%, while the size of the average bonus has nearly doubled from 0.64% to 1.10%.

	Two Years Ago	One Year Ago	Jan 2009	Today
Percentage of accounts including a bonus	10.8%	13.4%	14.1%	16.4%
Average size of bonus	0.64%	0.75%	0.89%	1.10%
Largest bonus payable	1.00%	1.55%	2.17%	2.65%
Source: Moneyfacts.co.uk 27.7.09

Michelle Slade, spokesperson from Moneyfacts.co.uk, commented:

“The savings market continues to be very competitive at present, with banks and building societies doing battle to attract saver’s money.

“Providers are continuing to offer ever larger bonuses as a way of temporarily boosting the rates on offer.

“Of the top ten easy access rates available at present, seven include significant bonuses.

“The size of the bonuses continue to increase, with in many instances the vast majority of the rate being comprised up of bonus. While this can provide short term gains, if savers neglect to move their money when the bonus ends, they may find themselves left with an account paying an uncompetitive rate.

“Currently the onus is on the saver to remember when a bonus period ends. To ensure you don’t get caught out it, may be worth making a note in your diary, so that you can review your savings needs at that time.

“Savers need to ensure they fully read and understand the terms and conditions of any savings account, before they commit their money.

“Many of the top deals that have been launched in recent months come with catches to get the best deals. We are seeing increasing number of savings accounts either restricting the number of withdrawals that can be made or interest rates being cut if funds are accessed.”

Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.

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