Savers should fix before rates fall further

A poll of moneysupermarket.com users has shown that, far from spending any extra cash they may have as a result of falling mortgage costs, 62 per cent of people plan to save that money instead.

With the Bank of England expected to cut interest rates further, those yet to invest up to £3,600 in a cash ISA this year would be best advised to look at a fixed-rate ISA.

Kevin Mountford, head of banking at moneysupermarket.com, said: "Despite the Government's attempts to get people spending big on the high street again, thankfully, people are seeing saving as very important now.

"If the credit crunch has taught everyone and every bank one important lesson, it is that savings are important.

"Regular saver accounts are useful if you suddenly find yourself with some spare cash - you can be penalised for any early withdrawals meaning they encourage a little bit of discipline. But in this environment of falling rates, the argument to open a fixed savings product is a strong one. Back in October, I urged anyone with spare cash that they were sure they wouldn't need for a while to open any of the six or so fixed-rate bonds offering seven per cent or more.

"As long as you can afford to lock your spare cash away for the next 12 months, fixing is the best option - particularly tax-free.