Savings rates at highest level in over a year
Despite the continued record low in Bank of England base rate, research from moneysupermarket.com has revealed the top savings accounts are paying the highest rates for over 12 months but savers need to be quick to take advantage, as we have already seen some of the top rate deals being withdrawn.
Fixed rate bond rates are at their highest level since June 2010. The current average rate for a one year fix rate bond is 3.47 per cent,compared to 2.95 per cent a year ago; an increase of 0.52 percentage points. Similarly, two, three, four and fix year fixes have seen a steady increase since the start of 2011.
In addition, moneysupermarket.com compared the rates for the top five ISA, bonds and found the average rates are at the highest levels since March 2010. For one year fixed rate ISA bonds, the current average rate is 3.13 per cent, 0.13 per cent higher than March 2010, while there has been an increase of 0.33 per cent for two year fixes, with the current average rate at 3.58. For three year fixed rate ISAs, the average rate has increased by 0.13, to 3.99 per cent.
Easy access savings rates last week had been at their highest level since December 2009, however they have dropped slightly to an average rate of 2.95 per cent compared to 2.97 per cent at the beginning of June, showing these saving highs may not be around for long.
Kevin Mountford, head of banking at moneysupermarket.com said: "Now could not be a more pivotal time for savers to consider their savings rates, as the rising cost of living puts the nation's finances under strain. However, despite low interest rates, there is still healthy competition among savings providers and savvy savers need to be quick to take advantage as these rates may not hang around for too long. Savers should grab them while they still can. For those who are able to lock their money away for a while, the current rates on fixed rate bonds are very appealing and the rates are certainly stronger than the lower levels seen over the past year.
"Savers should beware that the majority of easy access rates include a bonus, which providers use to lure consumers in. At a time when consumers are being hit from every angle, including high inflation and a record low base rate, people should take advantage of bonus rates to buffer their savings. However, the benefits can soon be wiped out if you forget to switch once the bonus period has expired so make a note of the expiry date and be ready to switch again. If you are unsure of the rate you currently receive, check your statements or call your bank to find out, and be prepared to switch to a better deal. With the majority of savers sitting on low savings rates, switching accounts could see them enjoy greater returns at a time when banks are fighting for their cash."