Interest rates have faced challenges recently, but Paragon Bank has stepped in with a new offering. The provider has decided to increase the interest rates across all of its fixed rate products. The step was taken in order to offer further choice to savers who are currently on the lookout for competitive fixed rate options, Paragon Bank has said.
Those who wish to apply for a Paragon Bank account will be able to do so in a number of ways.
The bank has said applications can be made online, by telephone or by post, depending on which option is most suited to a person’s needs.
But it will be important for Britons to understand exactly what products will be changing going forward.
The Fixed Rate Bonds which are affected by the rate increase are:
- One Year account (previous interest rate of 0.50 percent AER, increasing to 0.55 percent AER)
- Two Year account (previous interest rate of 0.65 percent AER, increasing to 0.70 percent AER)
- Three Year account (previous interest rate of 0.80 percent AER increasing to 0.85 percent AER)
- Five Year account (previous interest rate of 0.9 percent AER, increasing to 1.00 percent AER)
Rachel Springall, finance expert at Moneyfacts, spoke to Express.co.uk about the new offerings from Paragon Bank.
Ms Springall provided further insight into what this means for savers and how they may wish to act next.
She said: “The rate rises from Paragon Bank are positive considering average savings rates sit at record lows.
“Those savers looking for a fixed return on their cash over the short-term will find the one and two year bonds competitive, but it’s the three year fixed bond which takes a place within the top ten best deals on the market.
“Savers may not be prepared to lock their funds down over the longer-term in light of the coronavirus pandemic, but if they have £1,000 to invest and are happy to do so, then Paragon Bank are offering reasonable returns in the current market.”
This increase in interest rates is likely to be welcomed by savers who have found it tough to grow their money recently.
As a result of the pandemic, the Bank of England took the decision to reduce its base rate to an historic low of 0.1 percent.
This had a domino effect on more familiar high street and other providers, making it challenging for Britons who wish to save.
An increase in interest rates then, even for fixed rate products, may provide a safe haven for Britons at this time.
Ms Springall concluded: “These rates can be beaten, so savers would be wise to compare their options and many of the top deals are on offer from other challenger banks.
“Challenger banks protected by the Financial Services Compensation Scheme (FSCS) are no different to a well-known high street bank.
“Savers would be wise to consider these more unfamiliar brands that are offering decent rates of interest.”