Paragon Bank has launched its best buy easy access savings account paying 5.25% AER (variable). Odds make the account a best buy savings accounts.
Even if the rate does not exceed inflationThe new rate, currently at 6.7% easily accessible savings the rate matches the Bank of England’s base rate, frozen at 5.25%months later interest rates are increasing.
Paragon launched the first issue of this savings account in July and has been increasing rates ever since – last time Interest rate was increased in September when it increased rates from 4.75% AER to 5.05% AER, but this was withdrawn within three weeks due to popular demand.
It’s worth noting that there are some restrictions if you want to take advantage of this rate, and we explain why you may need to act quickly to take advantage.
How does a Paragon savings account work?
Although the account is easy to access, it is dual access, meaning you can access your money twice before being penalized.
Paragon Bank savings director Derek Sprawling said: “This product can track:
savers who are happy to lock up their money but may want to still have access to it on a rainy day.”
If you make more than two withdrawals in a 12-month period, rates drop to just 1.5%.
How much do I need to open a savings account with Paragon Bank?
You can do start saving on account Save £1,000 up to a maximum of £500,000 – but only up to £85,000 is protected by the Financial Services Compensation Scheme (FSCS).
You must make your first minimum deposit within 28 days of opening your account or your savings will be closed. Additionally, if at any point your balance falls below £1,000 the account will be closed.
Since the rate is variable, it may change. Paragon says you’ll be notified as soon as possible if the rate on your account increases, but this may happen after the rate goes into effect. If the rate decreases, you will be notified 14 days before the change.
How long can Paragon bank interest rate be used?
The bank has confirmed that the new rate on Double Access Savings will only be on sale for a limited time; so you’ll need to act quickly to catch the new 5.25% cap rate.
The best buy rates are usually set when the account reaches capacity.
For example, HSBC withdraws its one-year fixed ISA offered the highest AER rate of 5.7% for a limited time.
NS&I also offers its market-leading one-year fixed bond with Drew It offers 6.2% AER just five weeks after launch. This was the highest rate seen on bond products since 2008.
street giant Santander cuts rate on market-leading 5.2% easy-access savings account A week earlier than expected due to high demand.
What are the alternatives to Paragon?
If you are looking for an easily accessible account with no limit on the number of withdrawals, there are alternatives with minimal interest rates.
Beehive Coin Limited Edition Easy Access country 5.2% with unlimited withdrawals and £1,000 minimum deposit, same as Paragon.
To qualify for this account you must be a UK resident, aged 18 or over. You can open and manage the account online and choose to have the interest paid monthly or annually.
Other alternatives include:
If you are looking for an account that offers withdrawal freedom, you can choose Beehive Money Saver or Ulster Bank.
Unless you have a minimum balance of £5,000 to save at Ulster Bank, Beehive Money only needs £1,000.
Of course, if you’re willing to lock in your money, you can get a higher rate of return on your savings. Right now, best one year fixed savings accounts Offer more than 6%.
Also, if you have less than £20,000 to save in a year, it may be worth opening an ISA and filing a tax return on your money; Read more about which is better, savings account or an ISA.