Top Savings Rates May Not Last

Savings rates are at their highest level in over a year, concludes research from Moneysupermarket.com. But they may not be around for long.

If you want your savings to work harder for you, now is the best time in over a year to take advantage of high savings rates on some accounts.

New research by price comparison site Moneysupermarket.com has found that fixed-rate bonds lasting between one and five years are offering their highest interest rates in the last 12 months. On average, a one-year bond will yield 3.47% interest – 0.52% more than a year ago.

Meanwhile, ISA bonds with a fixed rate of one to three years are offering their highest rates in 15 months. The current average rate for a one-year ISA bond is 3.13%, 0.13% more than in March last year.

A good fixed-rate bond can help you continue saving at a higher rate for a fixed period even if the market declines, making it a good way to take advantage of the current rates.

This could be particularly important if the higher rates begin to disappear, as suggested by Kevin Mountford, Moneysupermarket.com’s head of banking. “Savvy savers need to be quick to take advantage as these rates may not hand around for too long,” he said.

Bonus rates also attract savers

Banks and building societies are also offering favourable bonus rates to savers when they open certain savings accounts – some in the region of 2.5% more than the normal offered rate. But these only last for for a fixed period – usually 12 months.

Savers can take best advantage of these by switching accounts when the bonus period expires and put their money into a new account to take advantage of a fresh rate.

Moneyhighstreet comments: “Now is an excellent time to review the returns on your savings and, if you’re a new saver, to get started. Comparing savings rates online can help you find the best deals.

“If you can afford to lock away some money for a while, fixed rate bonds will be a good investment. But beware of easy access accounts, which use high bonus rates to attract consumers. These can be beneficial in the short term, but they will expire. Be sure you know when they do to keep getting the best deal.”