The Bank of Cyprus has launched an online savings account paying 1.05%, making it one of the top-paying instant access accounts currently available.
While many savings accounts are paying a paltry 0.15%, the Bank of Cyprus’s rate of 1.05% relies on a bonus – a variable underlying rate of 0.6% (which could be reduced) plus a bonus of 0.45%, fixed for the first 12 months.
Deposits of up to £85,000 held with Bank of Cyprus UK are protected by the Financial Services Compensation Scheme (FSCS), the UK’s deposit guarantee scheme.
The new account is only beaten by a couple of other instant access accounts. The Yorkshire Building Society’s Single Access Saver Issue 3 account is currently the top payer at 1.15%, though this can only be opened in a YBS branch or by post, which will put off some.
The Britannia recently launched its Select Access Saver 7 account paying 1.1%. This can be opened online but has a minimum investment of £500. The Renault-owned RCI bank also has an account paying 1.1%.
The problem with all these accounts is that they are paying about half the current rate of inflation (2.3%), meaning that even if you have your cash in a top-paying account you are losing money each month.
To get above 2.3% savers must look to stocks and shares investments or peer-to-peer lenders. RateSetter is currently paying 2.7% on its rolling monthly market, or 4.7% if you are prepared to put away your money for five years – though early access is possible provided others come into the market – and is subject to a 1.4% sellout fee.
Deposits with peer-to-peer lenders are not covered by the FSCS should the worst happen and the lender stops trading. So far firms like RateSetter have proudly claimed that no investor has lost out.