Savings provider Cahoot has changed the issue number and raised the interest rate on its easy access account to 4.85 percent, earning an “excellent” Moneyfactscompare rating.

People can open the Simple Saver (Issue Four) with just £1, with the option to receive interest monthly or annually. Cahoot is a division of the high street bank Santander.

Commenting on the deal, Caitlyn Eastell, a spokesperson at Moneyfactscompare.co.uk, said: “Cahoot has changed the issue number and increased the rate on its Simple Saver account this week. Paying 4.85 percent gross, the deal takes a place in our top rate tables when compared against other easy access accounts.

“Savers will need as little as £1 to open the account and it may be an ideal option for those looking for some flexibility when it comes to their savings.

“Adding to its appeal there is a monthly interest option for those looking to give a boost to their income.

“However, it is worth noting that no interest is paid on the portion of the balance over £500,000 which may be worth considering. The account secures an Excellent Moneyfacts product rating.”

While Cahoot may be offering a more competitive interest rate, it isn’t currently topping the table in the easy-access savings sector.

Ulster Bank's Loyalty Saver offers an Annual Equivalent Rate (AER) of 5.2 percent on deposits of over £5,000.

Those with deposits lower than £5,000 will be paid a lower AER of 2.25 percent. Interest is paid annually and on account closure, and withdrawals are permitted at any time up to the daily limits.

Principality Building Society falls just behind with its Online Bonus Triple Access (Issue Two) paying an AER of five percent.

The rate includes a 1.4 percent bonus for 12 months and savers can launch the account with a minimum deposit of £1. Interest is paid yearly and up to £1m can be invested overall. Only three withdrawals are permitted per year.

Savers are being urged to “act quickly” to snap up the top rates following the Bank of England’s decision to reduce the Base Rate by 0.25 percent in August.

Kevin Mountford, the co-founder of Raisin UK, said: "The Bank of England has reduced interest rates by a quarter percentage point to five percent. This comes after rates were held at a 16-year high of 5.25 percent since August 2023.

"Savings accounts and tracker rate mortgages should reflect these lower interest rates immediately. Fixed-rate mortgages have already factored in the likelihood of lower rates, with some reductions in the past few weeks."

Mr Mountford continued: "Any individuals with savings or pension pots should consider locking in any market-leading rates on longer terms immediately, as this will prompt reductions across the market, leading to lower interest earnings over time.

"While [the] rate cut eases consumer pressure, it may still be some time before we see significant relief for household finances. We shouldn't expect borrowing costs to decrease as rapidly as they increased, and we may see one more cut before the Chancellor's Budget announcement in October. "