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Savers will have to look long term

Savers will have to look long term

Category: Savings

Updated: 17/12/2009
First Published: 17/12/2009

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Long term fixed rate accounts will continue to offer savers the best returns in 2010, according to new year predictions from Moneyfacts.co.uk.

Although savings rates overall are expected to remain broadly unchanged on this year, it is thought fixed rate bonds and ISAs requiring savers to lock their money away for five years or more will still offer the highest rates.

However, it is predicted that these products will become increasingly unpopular with savers as the likelihood of a rise in the base rate increases.

Research from Moneyfacts.co.uk recently revealed that around two thirds of savers looking for a fixed rate investment were only prepared to commit funds for up to three years, with the majority looking for no more than a two year bond.

"As we move through the new year, the maximum term that most savers are prepared to commit funds for is likely to decrease, as there is still uncertainty over how quickly the Bank of England will increase base rate to a more realistic level of between three and five per cent," said Michelle Slade, spokesperson for Moneyfacts.co.uk.

Meanwhile, large bonuses but limited withdrawals are both expected to remain prominent features of easy access accounts, leaving the onus on savers to check carefully terms and conditions before committing their money.

The biggest boost for savers in 2010 is forecast to coincide with the start of the new tax year when all savers, and not just those over the age of 50, will be able to benefit from the increased ISA allowance of £10,200, up to half of which can be held in a cash ISA.

"As with previous years, the ISA season will inevitably bring a range of competitive deals both before and after the increased allowance comes into effect as providers look to attract savers' tax free allowance," added Ms Slade.

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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