Two market-leading 3.15% savings accounts pulled after one week

Two of the best savings accounts have been pulled from the market, just days after launch.

Two market-leading savings accounts from the West Brom Building Society have been withdrawn from the market just a week after they were launched.

Both accounts, an ISA and a standard savings account, paid out 3.15% in interest for a fixed period of five years.

So what can savers do now?

Falling savings rates

Savers have been battered by interest rates since the Government launched its Funding for Lending Scheme last year. It gave the banks cheap access to Government loans which meant there was no longer any need for them to rely on customer deposits.

Within the savings tables there is a real gap in accounts from the high street lenders. Because of this, smaller players such as West Brom are seeing huge levels of demand when they do launch new accounts. Last week savers rushed to open the new 3.15% accounts, causing them to be pulled within the week.

The highest interest rate available at the moment is 3.5%. This is on offer from Skipton Building Society and First Save but you’ll need to lock your money away for seven years to be able to benefit.

Looking at fixed rate accounts for five years, the best rate now comes from Secure Trust Bank which pays 3.11%. This requires £1,000 to open and can be operated online.

Vanquis Bank is in second place with an account at 3.06% followed by Leeds Building Society with an interest rate of 3.05% on balances of £100 and upwards. Here I’ve picked out the top five.

As the West Brom withdrawal also affected the ISA market, the highest rate here now comes from Leeds Building Society at 3.05% for a five-year fixed rate account.

Below are the current top five accounts in this range.

Alternatives to the savings market

The popularity of peer-to-peer lenders has increased significantly this year as savers look beyond the obvious options for income. With an average interest rate of 5% they offer a far higher rate of interest than any standard account.

The three main peer-to-peer websites are Zopa, Funding Circle and RateSetter. They work by linking individuals who want to borrow with those who are willing to lend, thereby cutting out the middle man – the bank. This means you can set the interest rate you want to receive and borrowers also get a cheaper rate.

The one catch with these is that they are currently unregulated. Regulation is on its way and by next April most major firms are expected to fall under Financial Services Compensation Scheme (FSCS) protection.

Current accounts are another avenue to go down. Nationwide Building Society pays out 5% on in-credit balances up to £2,000 while Santander pays up to 3% on balances up to £20,000. Clydesdale and Yorkshire Bank also pay 4% on balances up to £3,000.

The benefit of using your current account to earn interest is you’ll have instant access to the money but there are terms and conditions you’ll need to stick to in order to earn the interest.

Could you earn more with a peer-to-peer lender? Compare the best deals on offer

When to fix your savings

There has been little to get excited about in the savings market this year. Rates have been plummeting and even when a market-leading deal is launched, the rates on offer aren’t great and require you to lock your money away for the long term.

Recently there has been some action with Leeds and West Brom bringing out attractive new accounts so hopefully this is a sign that things are improving.

However, locking your money away for a return of 3% isn’t very enticing. It means you’ll be stuck on that rate until 2018 and unable to access the cash. Given that interest rates should improve during this time you could regret locking yourself in.

Compare the best savings accounts with lovemoney.com

More on savings:

What is peer-to-peer (P2P) lending?

The best Cash ISAs

The best fixed-rate savings accounts

Halfway through the tax year, have ISA rates improved?

The best instant-access savings rates

Savings rates slowly start rising