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PCF Bank offers new best buy three-year fixed savings deal paying 2% - but this is LESS than the top 12 month bond a year ago as rates plummet

Savings rates have continued falling over the last two months PCF Bank's deal edges out Gatehouse Bank and can be opened online or by postIn February 2019, Gatehouse offered a one-year deal paying 2.15%

There is a new top three-year fixed-rate deal in the independent This is Money tables.

PCF Bank, a relatively new bank having been authorised in 2016, has launched a new three-year tie-up paying 2 per cent.

This edges the previous table topper, from Gatehouse Bank paying 1.9 per cent, into second place. 

However, this new best buy rate is inferior compared to the top 12 month bond from February 2019.  

PCF Bank offers new best buy three-year fixed savings deal paying 2% - but this is LESS than the top 12 month bond a year ago as rates plummet

Lock-up: Sticking cash away for three years now gives you less of a reward than locking it away for 12 months in 2019

This could cause a headache for those looking for a new home for their savings as year-long bonds expire.  

Gatehouse Bank, a Sharia-bank which pays an expected profit rate rather than a fixed rate of interest, offered a one-year deal which paid 2.15 per cent on balances of at least £1,000 on 1 February 2019, according to Moneyfacts.

The average one-year fixed-rate account paid 1.47 per cent in 2019, more than the current average three-year fixed-rate deal, which pays 1.42 per cent.

Meanwhile, the best three-year rate paid half a percentage point more than it does now. 

This would make a difference of more than £50 a year on a deposit of £10,000, thanks to the interest being rolled up and compounded on the final balance.

How rates have fallen 
Length of fixed-rate term Best rate in February 2019 Best rate in February 2020 
One year2.15%1.65% 
Two year 2.4% 1.8% 
Three year 2.5%2% 
Source: This is Money/Moneyfacts 

Currently, the best one-year deal is offered by smartphone-only provider Atom Bank, and pays 1.65 per cent, again 0.5 percentage points lower than the top account from a year ago.

Savings rates have been on a downward spiral since the early part of last year, thanks to political instability weighing on money markets and banks prioritising borrowers over savers. 

Fixed-rate deals have been particularly squeezed, and three-year tie-ups actually almost halved between December 2010 and December 2019.

And despite the Bank of England agreeing last week to hold the base rate at 0.75 per cent, there is no suggestion savings rates will inch up.

In December, the best easy-access deal paid 1.41 per cent, the best one-year fix 1.7 per cent and the best three-year deal 2.1 per cent. 

Given the best easy-access rate pays 1.35 per cent, the top rates across all three categories have fallen even further over the last two months.

The PCF account can be opened online, but also by post, and managed on the phone, with a minimum deposit of £1,000. 

PCF Bank is a London-based savings bank which uses savers' deposits for the purpose of business, car and short-term property financing.

It won 'best new provider' at the Savings Champion awards in 2018, and is covered by the Financial Services Compensation Scheme, meaning deposits up to £85,000 are safe if it ever went bust.

THIS IS MONEY'S FIVE OF THE BEST SAVINGS DEALS

Gatehouse Bank pays a top rate of 1.7% AER interest on its one-year fixed rate account. The minimum deposit is £1,000. The bank is Sharia compliant and therefore pays an expected profit rate rather than guaranteed interest.

Newbury BS pays up to 1.5% AER interest on its easy access Welcome to Newbury account, which can be opened online or in person with a minimum of £5 up to a maximum of £3,000. Only available to new members.

Cynergy Bank pays a rate of 1.4% AER interest on its one-year fixed rate Isa. The minimum deposit required is just £500.

Yorkshire BS pays a top rate of 1.35% AER interest on its one year Limited Access Saver account. The account permits withdrawals on one day of the year only . It requires £100 to open, make sure to switch after a year as the rate drops.

Masthaven pays 1.68% AER interest 18-month fixed-rate savings account. It requires £500 to open an account.

Check our independent best-buy savings tables

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