Get 5.6% with this 365-day discover account that beats one-year fixes

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Savers can beat the best one-year fixed rate accounts by some margin with a new 365-day savings account paying 5.6 per cent.

The 365-day notice account is being offered by saving and investing platform Prosper*, in a deal that This is Money has secured exclusively for readers.

The account pays a variable rate tracking 0.35 per cent above the Bank of England base rate, giving a current rate of 5.6 per cent. This comfortably beats the top one-year fixed rate account, Smartsave Bank’s 5.16 per cent.

And while savers have to wait 365 days to get at their money, they could treat it as a quirky alternative to a one-year fix by opening Prosper’s account and giving notice immediately.

Is time on your side? Prosper is offering a 365-day notice account paying 5.6 per cent to This is Money readers

To get the deal, savers need to open an account using this This is Money and Prosper link*. 

Prosper’s 365-day notice account has a £15,000 minimum balance and carries FSCS savings protection up to £85,000 under Santander International, which holds savers’ deposits.

One-year fixed rate accounts have been a firm favourite of savers over the last year, as rates soared to as much as 6.2 per cent last autumn as the base rate climbed.

But as the Bank of England has held at 5.25 per cent since August, the best one-year fixed-rate accounts on This is Money’s independent best buy savings tables now pay only slightly north of 5 per cent.

A notice account is a type of savings account where you have to notify your bank a specific number of days before withdrawing cash. In the case of this Prosper deal, 365 days notice is needed, which is considerably longer than most accounts.

Currently, the best notice account deals on the market are a 5.25 per cent 180-day account from Hinckley and Rugby Building Society and a 5.25 per cent 90-day account from Investec. 

Prosper’s variable rate tracks 0.55 per cent above the Bank of England’s base rate which is now at 5.25 per cent, but there is a 0.2 per cent fee, which gives the net pay rate of 5.6 per cent.

Savers should bear in mind that the base rate is predicted to fall and if cuts do arrive, the pay rate on the account will fall too. Base rate would need to see two 0.25 percentage point cuts for the Prosper deal to fall to the level of the top one-year fixed rates.

Expectations of rate cuts have been reined in since the start of the year. Interest rate forecasts suggest the Bank of England will make its first move to lower base rate in summer, but that rates will not now fall as fast as previously thought.

It is now expected that rates will fall to 4.5 per cent or 4.75 per cent per cent this year – with the first move predicted in either June or August.

If the base rate is cut to 5 per cent, the rate on Prosper’s account will drop to 5.35 per cent. If the base rate falls to 4.75 per cent, Prosper’s rate will be 5.1 per cent, and if it is cut to 4.5 per cent, Prosper’s deal will pay 4.85 per cent.

> Find out more about Prosper’s 365-day notice savings account* 

What is Prosper and is your money safe?

Prosper is a savings and investments platform launched in 2022, with a mission to deliver cheaper investing and better savings for customers. Prosper’s investment platform currently offers completely fee-free investing across 30 index funds.

Its founder and CEO, Nick Perrett, and founder and chairman, Ricky Knox, worked together on launching challenger bank, Tandem, while their co-founder Phil Bungey was COO at Nutmeg.

As well as a cash savings account platform, powered by Akoni, Prosper offers Sipps, Isas and general investment accounts. 

Money put into Prosper’s 365-day notice account is held with Santander International and covered by Financial Services Compensation Scheme savings protection, up to £85,000 per individual saver.