first direct increases interest rates on two instant access accounts

first direct is increasing the interest rates on two of its instant access savings accounts. From Wednesday March 1, the group is increasing the rates on its FD Savings Account from 0.9 percent to 1.2 percent.

The rate on the FD Bonus Savings Account, excluding the bonus, is also increasing from 0.9 percent to 1.2 percent.

For its Bonus Savings Account, the 2.6 percent rate for balances up to £25,000 is increasing to 2.75 percent.

The one percent rate for balances above £25,000 is increasing to 1.6 percent.

Chris Pitt, CEO of first direct, said: “We review our rates regularly in order to make sure we are offering value to our customers. These boosted instant access rates will offer a better return for those customers that do need easy access to their savings.

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“Our instant access range complements our other savings products, which include our market-leading Regular Saver Account at sevent percent. We also offer ISAs and fixed rate accounts to suit our customers, whatever their saving goals and needs.”

first direct currently offers seven percent with its Regular Saver Account. The interest rate is fixed for 12 months from when the account is opened.

Interest is calculated daily and paid on the anniversary of when the account was opened. A person can apply for the account online.

The account is only open to 1st Account customers and new customers will need to open a 1st Account before they can set up a regular saver.

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Bank of England rate setter Catherine Mann has warned further increases to the base rate may be needed “sooner, rather than later” to get inflation under control.

She said: “Monetary policy has taken a path which has been ­aggressive, but perhaps insufficiently so relative to the multiple shocks and the behaviours pushing up inflation.

“We have an inflation remit and will achieve it one way or another. Failing to do enough now risks the worst of both worlds.”

Victoria Clarke, UK chief economist at Santander’s corporate and investment banking arm, warned high interest rates could continue for some time.

She said: “Concerns over sticky underlying inflation will likely force the Bank of England to hold policy at these restrictive levels this year, we think. We do not expect cuts in the base rate until 2024.”