Savers snap up fixed rate bonds Average accounts sold out in 23 days

16 November 2009


Savings rates have fallen

Savers keen to secure competitive fixed rate bonds are signing up for accounts at record speeds, new research has shown.

On average, fixed rate savings accounts are now available for less than a month before being fully subscribed and withdrawn from the market, according to financial data firm Moneyfacts.

In March 2006, the average shelf-life of a fixed rate bond was 158 days, but by March 2009 this had fallen to 49 days. In October 2009, the average fixed rate savings account was being withdrawn from the market just 23 days after being issued.

Best savings rates

Fixed rate bonds have been offering much higher rates than instant access savings accounts over the past few months. According to Moneyfacts, around 34% of all savings searches are now for fixed rate bonds, with the average amount invested standing at £40,076.

However, savers with maturing one-year deals are likely to find the return on their savings reduced, as last year’s top accounts expire.

Moneyfacts says the maximum rate available on a one year fixed rate bond has fallen from 6.70% in November 2008 to 3.95% today. On a £40,000 deposit, that will amount to more than £1,000 less interest over the next 12 months.

Find a fixed rate savings account

Which? Money editor James Daley said: ‘Anyone looking to invest in a fixed rate bond needs to act quickly when the right deal comes along – otherwise you could find the attractive rate you’re after is withdrawn.

‘However, it is worth remembering that putting money into a fixed rate account means locking it away for a year or more. There are penalties for withdrawing cash from a fixed rate bond before it reaches maturity, so it’s advisable to keep some savings in an accessible account for emergencies – perhaps three to six months’ worth of salary.’

To find a top 12 month fixed rate bond, check out the latest Which? Best Buys. If you’re looking for a medium-term or long-term fixed rate savings account, the Which? fixed rate savings finder will help you track down the best deal.

Meanwhile, if you’re unsure of whether a fixed rate account is the right choice for you, check out the FAQs section of our fixed rate savings account review. You can also compare instant access savings accounts by checking out the Which? savings account review.

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