Tesco Bank raises interest rates across savings accounts and ISA range – full details

Martin Lewis advises on savings accounts for deposits

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Tesco Bank announced today it will be increasing interest rates on a range of its savings products. This increase arrived just as average savings rates plummeted to all time lows.

Tesco Bank increased the following accounts from today:

  • Internet Saver: Interest rate increased from 0.3 percent Gross/AER to 0.41 percent Gross/AER
  • Instant Access ISA: Interest rate increased from 0.3 percent Gross/AER to 0.41 percent Gross/AER
  • Fixed Rate ISA: Interest rate increased from 0.4 percent Gross/AER to 0.52 percent Gross/AER
  • Fixed Rate Saver – 1 year: Interest rate increased from 0.35 percent Gross/AER to 0.52 percent Gross/AER
  • Fixed Rate Saver – 15 months: Interest rate increased from 0.4 percent Gross/AER to 0.56 percent Gross/AER
  • Fixed Rate Saver – 18 months: Interest rate increased from 0.45 percent Gross/AER to 0.62 percent Gross/AER
  • Fixed Rate Saver – 2 year: Interest rate increased from 0.5 percent Gross/AER to 0.68 percent Gross/AER
  • Fixed Rate Saver – 3 year: Interest rate increased from 0.55 percent Gross/AER to 0.78 percent Gross/AER
  • Fixed Rate Saver – 5 year: Interest rate increased from 0.75 percent Gross/AER to one percent Gross/AER

A Tesco Bank spokesperson commented on the increases.

They said: “At Tesco Bank we constantly review our savings products to ensure we offer the best value possible for our customers.

“Both our fixed rate and instant access savings customers will benefit from this increase in rates, which are among the most competitive in the market.”

Savers will likely be keen to take advantage of these kinds of increases as average rates sit at rock bottom levels.

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On June 18, Moneyfacts.co.uk released their latest mortgage and savings rate data which showed the average no notice savings rates sat at 0.1656 percent.

According to its findings, this means average rates are at their lowest levels since at least January 2016.

Rates are unlikely to rise significantly any time soon as the Bank of England has hinted it will keep interest rates low as the economy recovers.

On June 24, the central bank elected to keep the base rate at 0.1 percent, which in turn limits what retail banks can offer.

At the same time, it was highlighted inflation may rise to unprecedented levels in the coming months, which will impact savers further.

Jason Cozens, the Founder & CEO of Glint, commented on this in response to the Bank of England’s decision.

Mr Cozens said at the time: “Despite rapidly rising inflation, the Bank of England is refusing to adjust interest rates.

“Inflation is clearly out of control and consumers need more support from the bank. Currently, their cash and savings are losing value by the day as inflation outstrips interest rates.

“In the UK, we’ve already surpassed the two percent target and there is even talk of inflation hitting four percent this year.

“US inflation sits at five percent, the highest level since the financial crisis and production prices in China are up nine percent in a year putting global consumers at real risk of further price hikes if these increased production costs are passed on.”

“In addition to rapidly rising inflation and low interest rates, the value of our cash and savings is also eroded by consumers are hit by continued quantitative easing – around £900bn since the financial crisis – and shocking levels of government borrowing and debt – UK national debt sits at over 98 percent of GDP or £2.17trillion.

“These factors ensure that the purchasing power of sterling declines over time and reduces the value of the cash in our wallets and our savings in the bank.”

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