Top rates for savers won’t be around for long, banking expert suggests

Savers in the UK can take advantage now of savings rates that are at their highest level in over a year, it is claimed.

One, two, three, four and five years fixed rate bonds are at their highest for 12 months with ISA bonds seeing their highest average levels since March 2010 for one, two and three year fixed rates, according to the latest research from moneysupermarket.

It has also found that there has been a 0.32% increase on two year fixed rate ISA bonds since March 2010 but it advises savers to check the small print and look beyond attractive bonus rates to make the most of their savings.

But while the top savings accounts are paying the highest rates for over 12 months, savers need to be quick to take advantage, as some of the top rate deals are already being withdrawn.

The current average rate for a one year fix rate bond is 3.47%, compared to 2.95% a year ago, an increase of 0.52%, according to the comparison site. Similarly, two, three, four and fix year fixes have seen a steady increase since the start of 2011.

The current average rate for one year fixed rate ISA bonds is 3.13%, 0.13% higher than March 2010, while there has been an increase of 0.33% 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%.

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 compared to 2.97% at the beginning of June, showing these saving highs may not be around for long.

‘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,’ said Kevin Mountford, head of banking.

‘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,’ he added.

He pointed out that 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,’ he said.

‘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,’ he added.