TSB becomes latest major bank to raise savings rate, increasing pressure on other big names to follow suit

  • TSB fixed rate accounts now offer up to 2.5%
  • Her regular savings deal has also risen to 2.5%
  • Its easy-to-use deal remains at 0.25% – significantly lower than the market-leading deal

TSB has become the latest major bank to raise rates on a range of its savings products, following Santander earlier this week.

The bank, which has more than 200 branches across Britain, raised its fixed rate bond rate to 2.5 per cent and also increased its three cash Isa deals.

TSB has increased the annual fixed rate from 0.81 to 2 per cent, the two-year deal will now pay 2.2 per cent instead of 1 per cent and the three-year deal has risen from 1.1 per cent to 2.5 per cent.

Big banking boost: TSB today announced rate changes for a range of its savings products

None of these deals are among the best on the market, but they are a lot better than what all the other high street banks are offering.

It follows Santander, which also raised rates on a range of fixed rate and easy access products on Monday.

TSB’s announcement today will be seen by some as a sign that the big banks are starting to compete for depositors’ money by raising rates.

James Blower, founder of Savings Guru, said: “These moves could be a sign that competitive pressures are driving them and savers are responding to market growth and making purchases.

“It will be interesting to see if this prompts some of the big four to follow suit and move as well.”

Other prominent savings products TSB plans to boost today include a monthly regular savings deal, which will now pay 2.5 per cent, up from 2 per cent. Its fixed rate cash Isa deals have also increased.

However, both of its popular easy-access accounts will remain at 0.25 percent, though that’s still better than most other big names.

Santander, home to 5.4 million UK customers, has also announced new and improved deals on a range of fixed bonds, easy access accounts and Isa

Santander, home to 5.4 million UK customers, has also announced new and improved deals on a range of fixed bonds, easy access accounts and Isa

How does TSB compare?

In terms of fixed rate deals, TSB is well behind the best rates on the market.

The best one-year deal Cynergy Bank currently offers pays 2.72 per cent, compared with TSB’s 2 per cent.

However, when compared to its high street rivals, TSB is well ahead.

For example, NatWest and RBS pay just 0.4 per cent on an annual fixed deal, while HSBC pays 0.45 per cent.

Fixed rates on the High Street
Provider Annual fixed rate Two-year fixed rate
1. NatWest/RBS 0.4% 0.4%
2. Lloyd’s ON 0.8%
3 Halifax ON 0.8%
4. HSBC 0.45% 0.5%
5. Barclays 1% 1.3%
6. Nationwide 1.1% 1.4%
7. Santander 1.4% 1.9%
8. BSE 2% 2.2%

In terms of readily available savings, TSB’s decision to leave its rate at 0.25 per cent may well be due to the ridiculous rates offered by other big names.

Only Santander beats it with 0.75 per cent, while Halifax matches it with 0.25 per cent.

Most high street banks pay much less – Barclays is the worst offender, paying just 0.01 per cent to its easy access depositors.

Easy access to High Street banks
Provider Best speed for easy access
Santander 0.75%
Halifax 0.25%
BSE 0.25%
Lloyds Bank 0.2%
HSBC 0.1%
NatWest 0.1%
RBS 0.1%
Barclays 0.01%

In terms of the rest of the market, the easy access rate remains around six times lower than the highest paying deals.

Chase Bank’s Easy Access linked program pays 1.5 per cent on balances of up to £250,000, while Virgin Money pays 1.56 per cent on balances of up to £25,000, although you’ll need to have a current account at either bank , to have the right.

Meanwhile, Al Rayan Bank now pays 1.45 percent for its easy access deal, while a number of providers also pay 1.4 percent.

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