Savers have noticeably begun moving money to notice accounts which offer higher rates, according to banking sector trade body UK Finance.
Though a trend emerged of customers dipping into savings pots during the second quarter, resulting in lower deposits year on year, inflows to notice accounts grew by 23%.
Deposits in easy access accounts fell by 7% compared to the second quarter of 2022 meanwhile, the group said in a report.
“Some have been dipping into their savings to help to pay the bills, whereas some of those with savings have moved their money to accounts with higher rates to maximise their income,” UK Finance director Eric Leenders said.
According to Moneyfacts, West Brom Building Society and Oxbury Bank offered among the best notice savings accounts last week, with interest rates of 5.25% and 5.45% respectively.
Though these prevent customers from accessing funds by up to ninety days, rates on the notice accounts outdid the best easy access accounts, which sat between 4.90% and 5.00%.
Notice accounts do indeed “generally offer a higher return”, UK Finance explained, marking an enticing option for those able to lock up money for lengthy periods.
Higher rates on mortgages have also begun to bite however, with arrears rising during the period.
“Whilst the cost of living challenges have created acute hardship for many, we have also seen that other consumers were largely able to pay off their credit card bills and meet their monthly mortgage payments,” UK Finance added.
Some 700,000 borrowers also saw their fixed-rate terms end over the last quarter, meaning they are likely to have ended up with higher monthly payments after renewing.
“Circumstances can change,” the group said, “so if anyone is struggling with their mortgage payments, they should reach out to their lender”.