Battle continues to secure savers' money

The battle between banks and building societies to attract savers' money shows no signs of easing, with new competitive deals being launched each day.

Back in March when base rate dropped to 0.50%, there were just three fixed rate bonds paying 4% or over. Today that number has jumped to 104.

Banks and building societies prefer to keep savers money for four or five years, and this offer the best rates for longer term deals.

Michelle Slade, spokesperson for Moneyfacts.co.uk commented: "Most fixed rates investments don't allow early access, as this guarantees the length of time the fund are available to the provider.

"Continuing volatility in the money markets is seeing providers increasingly having to use their savings books towards funding their lending activities.

"There has been a marked rise in all types of fixed rate investments, including bonds, ISAs and escalator bonds.

"Escalator bonds work in the same way as traditional fixed rate bonds but the interest rates rises in steps, typically each year.

"While the rates in the higher years are headline grabbing, those in the earlier years can be lower than those offered on best buy products.

"Savers are seeing increased levels of choice for their money, but they need to take the time to make sure the product they select is suitable for their needs.

"Many bonds offer no access during the term, if a savers circumstances change and they need to access the funds, they may be unable to do so.

"While longer term deals may offer the most attractive rates now, when base rate increases these deals may become uncompetitive."