Act quickly or miss out on top rates, experts warn

Experts warn that savers need to act now if they don’t want to miss out on the top rates on offer from the nation’s banks and building societies as financial service providers flog fixed rate bonds with attractive terms in order to drive savings deposits.

Long term fixes have seen their interest rates rising steadily as banking executives try to entice savers to lock away their cash for several years at a time.  The new three-year fix launched recently by Close Brothers bears a 4 per cent pre-tax interest rate, provided a saver deposits at least £10,000 and is willing to use online banking or the post to manage their money, and similar offers from Saga and Halifax have also been grabbing headlines with a 3.85 per cent rate of return on their own long-term fixed rate bonds.

One-year fixes tend to be less lucrative than their longer-term counterparts, with Tesco offering a 3.5 per cent deal.  BM Savings recently closed a similar deal, giving savers some impetus to hurry up and make a decision quickly before the rest of the deals are gone, such as the 3.6 per cent return on Santander-owned Cahoot, provided a saver deposits £25,000 or more.

Two-year deals offer a good middle ground in regards to returns.  Investec Bank is currently paying 3.8 per cent on deposits of at least £25,000, while Allied Irish Bank has a 3.7 per cent deal for balances over £1,000.

Industry experts say most High Street deals should be avoided, as they tend to be much less competitive than the alternative.  With the inflation rate currently so high – and predicted to stay that way throughout the rest of the year – picking a one-year fix from a provider such as HSBC or Lloyds TSB will actually see you losing money after basic tax is taken into account.

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