Natwest launches new savings deal with some of the best rates on the market

One of the UK’s major high street banks has launched a new digital savings arm offering some of the best interest rates on the market.

First Active, created by NatWest, is offering customers the same protections and assurance they would normally have with that company, only without in-branch assistance.

Consumers can secure an interest rate of 4.5 per cent in easy-access savings accounts with First Active, without restrictions on how much cash they can withdraw.

That rate compares favourably with the current market, with Chase (also 4.5 per cent) having previously led the way until a couple of limited 5 per cent recent offerings from Cahoot and Lemfi.

As with most of those rival accounts, there are a couple of factors to note with the First Active offering.

The 4.5 per cent total rate is built with a 3 per cent base rate and a bonus of 1.5 per cent. The bonus lasts for 12 months, after which your account would revert to the lower variable rate – this is the same with Chase, with a present 4.31 per cent offer from the Post Office and Cynergy Bank’s 4.55 per cent account. First Active allows savers to open an account with as little as £1, with a £1m maximum. In comparison, the Cahoot account has a £3,000 limit to earn interest.

Meanwhile, the best easy access savings rates available directly through NatWest are 1 per cent (easy access flexible), 1.15 per cent (cash ISA) and 1.6 per cent (children’s saver). Moneyfacts data shows the average easy access savings rate on 12 August is 2.52 per cent.

While you don’t need to be a NatWest customer to open an account with First Active, those who are already with the high street bank get FSCS protection on up to £120,000 of their total money with each provider, which in this case would include cash held with the new rollout.

The Independent understands that NatWest wanted to offer customers with different preferences an alternative option, as savers increasingly seek to move their money to where the best interest rates are, rather than merely sticking with a name they know – though First Active is not intended to run as a totally separate brand.

Customers who open an account with First Active will be able to manage their accounts via telephone support, web chat and email, but there is not intended to be any in-branch support.

It is estimated that more than a million current accounts hold over £50,000 in them across the UK, according to research from Spring, while over a fifth of all people (21 per cent) say they keep savings of any amount in their current account – equal to hundreds of billions of pounds.

These accounts often offer no interest at all and which therefore see savings lose real buying value over time, due to the effects of inflation.

British banks launching digital-only services is a common theme, partly to serve different customer bases and also perhaps because the ongoing overhead costs are far lower, which in turn could contribute to them offering the better interest rates often seen.

As well as First Active, NatWest runs the Mettle brand aimed at businesses, while Cahoot is owned by Santander and first direct initially launched as a telephone bank, before becoming HSBC’s digital-only version.

US firms JPMorgan Chase and Goldman Sachs have Chase UK and Marcus respectively, while of course a whole host of digital-only banks have succeeded in the UK including Monzo, Revolut and Zopa.