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Five minute finance: Finding a decent rate

Five minute finance: Finding a decent rate

Category: Savings

Updated: 16/08/2010
First Published: 16/08/2010

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 It is now over 6 months old so the content may be out of date.

The Bank of England base rate remains at 0.50%, with the eighteen months 'on hold' milestone due next month. Reports that the Monetary Policy Committee's voting was split at the last couple of meetings will have exacerbated many experts' beliefs that a unanimous decision to increase rates is still months away, with predictions of an increase in late 2011. Savers, whose returns are dependent on interest rates, will no doubt be perturbed at such a prospect.

Achieving a decent return has been particularly difficult for so many savers. According to, the average rate for a no notice savings account has fallen from 3.65% in August 2008 to its present average of 0.74%, highlighting the massive impact interest rates have on savings rates. This average has remained almost static over the past six months, so it is easy to see why savers feel so disgruntled.

Some savers who are determined to achieve the best rate possible for their hard-earned money are turning to fixed rate bonds. Of all the products in the savings market, fixed rate bonds offer some of the best rates with the current average one year fixed rate at 2.52%, 1.78% higher than the average no notice rate.

Despite offering an attractive, guaranteed rate, long term bonds may leave savers in a predicament once interest rates begin to rise as the initial rate will remain fixed. It is imperative savers bear this factor in mind to avoid any disappointment in the long term.

New tax free investment from Sainsbury's Finance

This latest cash ISA from Sainsbury's Finance pays a rate of 2.6% on its anniversary. Savers can invest a minimum deposit of £500. Transfers in are accepted and funds can be accessed instantly, without advance notice or penalty. The account is available to savers aged 18 and over and can be operated either by telephone or online.

New Growth Bond range from Post Office

The Post Office has unveiled its new range of Growth Bond Issue 13 products. Savers looking to lock cash in for a short period may be interested in the one year bond, which pays 2.65% on its anniversary. Investments range between £500 and £1m. Further additions and early access are not allowed. The account can be operated in branch or by telephone.

New Fixed Term Deposit flying high

The Co-operative Bank has re-launched its Fixed Term Deposit range, with a new market leading one year deal at 2.81%. Savers can invest between £2,000 and £1m, although further additions and early access are not permitted. The account can be operated in branch, by post or telephone by savers aged 16 and over.

New fixed rate bond 'Rocks' the top five

The new Fixed Rate Bond Issue 407 from Northern Rock pays an attractive annual rate of 4.50%. Investments of between £1 and £2m can be made and further additions are allowed. Early access is not permitted. The account is available to savers of all ages and can be operated by post only.

Rachel Thrussell, Principal Consultant of Banking and Economic Insight at Moneyfacts, said: "Northern Rock's new five year bond offers a very attractive rate as it sits within the top five rates for a similar term. Clients need to commit funds for the full term as there is no flexibility for withdrawals on any of the bonds."

New three year mortgage deal from Yorkshire Building Society

Yorkshire Building Society has launched its new three year mortgage deal, with rates split by loan to value. Borrowers with a deposit of 25% can enjoy a rate of 3.65%, while a rate of 4.59% is available with a loan to value of 85%. Fees are £995 and £495 respectively.

Find the best savings rates for you - Compare savings accounts

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.