Bank launches savings account with ‘higher’ interest rate of 3.10%

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The bank confirmed the re-launch of its non-ISA Triple Access savings account towards the end of last week. However, this reissue of Paragon Bank’s savings product now pays an interest rate of 3.10 percent. This new interest rate has been readily available to savers as of Friday, February 10, 2023.

Thanks to Paragon Bank’s Triple Access account, customers will be allowed three withdrawals within a 12-month period without affecting their interest rate.

However, if a saver were to make a fourth withdrawal, the interest rate is reduced to 0.75 percent AER.

Through this particular account, savers can make unlimited deposits without penalty or restrictions.

As it stands, the bank’s Triple Access account is available for balances between £1 and £500,000.

Derek Sprawling, a savings director at Paragon Bank, emphasised why this particular offering can provide customers with a “higher rate”.

He explained: “In recent months we’ve been happy to see savers increasingly switch savings products in a rising rate environment, showing a preference for fixed-term products over easy access accounts.

“However, as the outlook for future rates has potentially peaked, we expect our Triple Access account to offer a great choice for those customers who don’t want to, or can’t, tie their money up.

“By limiting savers to three withdrawals per year we can offer a higher rate in return for rainy day savings.”

This latest move from Paragon Bank comes amid a wave of interest rate hikes from high street banks and building societies.

Financial institutions have passed on boosted rate increases to their customers following the Bank of England’s decision over the base rate.

The base rate is the rate at which the central bank charges other financial institutions for borrowing.

In the past year, the Bank of England has raised the base rate ten consecutive times in a bid to control the impact of inflation on the economy.

READ MORE: Recession fears continue despite UK economy growing

As a result, the base rate is now at four percent which has been partially passed on to the customers of Paragon Bank.

However, concerns have been raised about whether savings interest rates will be able to directly compete with inflation.

The latest figures for Consumer Price Index (CPI) inflation came to 10.5 percent which is significantly higher than any interest rate on offer to savers.

With this dilemma, returns from savings accounts are being diminished due to inflation’s influence.

Sarah Coles, the head of personal finance at Hargreaves Lansdown, shared: “It’s going to be a savage year for savings, as millions of people plunder their emergency savings pots.

“There are already signs that rampant inflation has forced people to dip in, leaving some vulnerable groups particularly exposed, and the pain is far from over.

“Runaway price rises have hit hard – with double-digit inflation pushing our expenses up far faster than our incomes.

“At the moment over a third of us have had to adapt either by cutting costs, spending our savings, or running up debts.

“The inflation rate for the essentials has been twice that of non-essentials, and because the essentials are so difficult to cut, it means an awful lot of people have eroded their savings.”

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