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Might there be light on the horizon for savers?

Might there be light on the horizon for savers?

Category: Savings

Updated: 24/06/2010
First Published: 24/06/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Savers could soon have something to get excited about after it was suggested a rise in interest rates might not be too far away.

A split vote occurred in the Bank of England's latest rate setting meeting, with one member of the Monetary Policy Committee wanting to raise base rate.

According to the minutes of the June meeting, Andrew Sentance favoured increasing the base rate from its historic low of 0.5% to 0.75%, the first vote for an interest rate rise by any committee member since August 2008.

Although the other seven members of the committee voted to keep rates unchanged, and therefore won the day, the vote by Mr Sentance has been seen as significant as it shows a split has emerged in the camp.

If other committee members start coming round to Mr Sentance's way of thinking that inflation is showing signs of getting out of hand, then a rise in interest rates might not be too far away.

Interest rates on savings accounts have been relatively low since base rate dropped to 0.5% in March last year.

However, for savers willing to put in the spade work, there are still some decent savings accounts around.

Some of the best rates currently available are on long term fixed rate bonds, such as the 5% offered by ICICI Bank on its five year fixed rate bond.

However, if you think interest rates might be about to go up in the near future, then a shorter term offering may be more to your liking. Santander, Barnsley BS and ICICI Bank all offer one year fixed rate bonds paying a return of 3% or even higher.

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