Savings product choice hits record highs amid falling interest rates

Why are there more savings products available?

The growth in savings products has been driven by the rise of challenger banks and savings providers (like Tembo), who have been introducing competitive products to rival the older high-street names. At Tembo, our range of competitive ISA savings accounts are designed to help savers save faster towards their life goals, like buying their first home. Explore the range here.

Why are saving rates declining?

Despite the growing number of options when it comes to choosing where to save your hard-earned cash, savers face the challenge of falling interest rates. The Moneyfacts Average Savings Rate dropped to 3.50% in August, down from 3.51% in July. Fixed accounts, which often provide higher returns, are also seeing reductions. The average one-year fixed bond rate fell to 3.99%, its lowest level since May 2023, while longer-term fixed bonds and ISAs also dipped below 4% for the first time since April 2023.

This is why at Tembo we’re proud to offer competitive rates across all of our savings accounts, not only way above the average rate, but also above the base rate, which currently stands at 4.00%. Right now, you can earn 4.1% AER (variable) on our easy access Cash ISA, 4.1% AER (variable) on our market-leading Cash Lifetime ISA and 4.27% AER (fixed) for 12 months with our Fixed Rate Cash ISA. 

Unlike other challenger savings providers and banks, we do not offer introductory teaser rates on our products. Why? Because we believe that intro rates are misleading - in fac,t the chief executive of the Financial Conduct Authority (FCA) described these introductory rates as the financial equivalent of a venus flytrap, because of how they suck people in.

At Tembo, we don’t change your interest rate just because you’ve been with us for over a year, you’ve made too many withdrawals or because you’re a returning customer. Instead, we reward new and old customers the same, regardless of how long they’ve been saving with us, or if they need to dip into their funds when unexpected costs appear.

What’s going to happen to savings rates?

With inflation forecasted to rise to 4%, it’s vital to review your accounts regularly and switch to better deals. For those looking to protect their savings from falling rates, fixed accounts like the Tembo Fixed Rate Cash ISA may offer a more stable option.

Not only is our Fixed Rate Cash ISA offering a competitive interest rate of 4.27% AER (fixed) - way above the current 4% base rate and 3.8% inflation level - but unlike other fixed rate ISAs, you can also keep adding in funds. Each deposit will then lock in for 12 months at the rate available at the time, allowing you to keep topping up your pot as time goes on. Find out more here.