Short-term bond rates increase

The average one year fixed rate bond has reached 2.85%, its highest level since August 2011. The number of one year bonds has also grown from 80 six months ago to 101 toda, according to MoneyFacts.co.uk.

Louise Holmes, spokesperson for Moneyfacts.co.uk, commented: "Savers prepared to lock their money away for a year have been given a boost with the average rate rising to an eight month high, whilst choice has also increased in the market."

"We have noticed, so far this year, that fixed rate bonds are a popular choice among consumers looking for suitable savings accounts, indicating that savers are willing to lock their money away in return for a better rate of return."

"Many of the top bonds are offered by lesser known names in the savings market and highlight the fact that if savers want to make the most of their money they may need to look further afield than their local high street."

"Whilst fixed rate accounts offer some of the better rates in the savings market, the majority prohibit savers accessing their funds during the term. Investors must be prepared to tie up their money for the duration of the term to avoid falling foul of strict penalties such as loss of interest or even account closure."