The Bank of England caught almost everyone off guard 10 days ago with its decision to raise interest rates by a quarter point to 5.25 per cent; most had expected it would hold off making any change until next month.
The move means rates have now been raised three times in the past six months, which should be good news for savers. However, while many companies are quick to announce rate hikes for borrowers, they often drag their heels in passing on increases to savers.
Only a handful of banks and building societies have to date revealed their intentions, but things look "fairly positive so far", says Sue Hannums from independent financial adviser (IFA) AWD Chase de Vere. "Those providers who have made announcements are planning to pass on the full amount."
National Savings & Investments and Marks & Spencer were quick off the mark - announcing, just hours after the Bank's decision, that they were raising the rate on their cash individual savings accounts (ISAs) by a quarter point with immediate effect.
But other companies that have already publicised their moves won't increase their rates until next month.
The Post Office, for example, announced its intention to lift the rate on its Instant Saver - to 5.5 per cent - on the same day as the Bank's decision. But this won't come into effect until 7 February.
Nationwide building society and HSBC have also promised interest increases, in line with the base rate rise, but these aren't scheduled to happen until 1 and 5 February respectively.
Ms Hannums urges savers with ING Direct - offering 4.75 per cent - to keep a close eye on what their provider does this time around; it refused to hand over the last rise, disappointing thousands of customers.
"It really ought to introduce a 'double whammy' of increases to catch up with the best buys currently on offer," she says.
Ms Hannums suggests that, depending on ING's announcement, savers could consider moving their cash to Landsbanki's online Icesave account. The Icelandic provider has already raised the rate on its easy-access online account by a quarter point to 5.7 per cent.
Ms Hannums adds that savers with Icesave are guaranteed that the annual equivalent rate paid on all accounts will exceed the Bank of England base rate by at least 0.25 per cent until 1 October 2009.Reuse content