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Short term bond rates increase

Short term bond rates increase

Category: Savings

Updated: 18/04/2012
First Published: 18/04/2012

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 It is now over 6 months old so the content may be out of date.

Short term savers are being offered their best rates of return for many months, new research has found.

Currently, the average rate paid by one year accounts is 2.85%, beating the average rate of 2.79% six months ago.

In fact, it is the highest rate paid since August last year, when savers investing their money in one year fixed rate bonds could also have expected a return of 2.85%.

Indeed, the current rate is an improvement on April 2011 (2.82%) and from two years ago, when the average rate was 2.83%.

And not only is the rate at its highest point for some time, there are also more accounts available in the market than at any other point in the last two years.

Savers have a choice of 101 one year fixed rate savings accounts, compared with 94 a year ago and 75 in April 2010.

Louise Homes, spokesperson for said the wider choice and better rates were a boon for savers.

"We have noticed so far this year that fixed rate bonds are a popular choice among consumers looking for suitable savings accounts, indicating that savers are willing to lock their money away in return for a better rate of interest," she added.

"Many of the top bonds in the savings market are offered by lesser known names, highlighting the fact that if savers want to make the most of their money they may need to look further afield than their local high street.

"Whilst fixed rate accounts offer some of the better rates in the savings market, the majority prohibit savers accessing their funds during the term.

"Investors must be prepared to tie up their money for the duration of the term to avoid falling foul of strict penalties such as loss of interest or even account closure."

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