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Fixed-rate savings bonds on the rise

Rates are at a 13-month high

Fixed rate accounts

Average rate on one-year bonds is now 2.82%

New research from Moneyfacts shows that high demand for savers’ money and expectations of a rise in bank base rate in the near future has pushed short-term fixed-bond rates to their highest level in more than a year.

The average rate on one-year bonds fell to an all time low of 2.52% in August 2010, but has steadily risen since then to reach 2.82% now.

Michelle Slade, spokesperson for Moneyfacts.co.uk, commented: ‘Savers prepared to lock their money away have been given a boost as rates on fixed-rate bonds have increased to a 13-month high.

‘Rates on fixed-rate bonds have steadily risen since August 2010, when the average rate for a one-year bond dropped to an all-time low of just 2.52%. The biggest increase in rates is on short-term deals, which are the most popular amongst savers.’

Which? Best Rates reveal some excellent deals

Paul Davies, savings analyst at Which, added: ‘There are some attractive fixed-rate deals around at the moment so check the Best Rate tables for the latest releases. You can currently get 3.4% on a one-year fixed bond from AA, FirstSave and Tesco Bank.

‘As ever you should consider whether you can afford to tie up your money for a period of time. Most bonds don’t allow withdrawals or if they do, you’ll pay a penalty. Don’t go for fixed bonds if you want to maintain access to your cash or want to benefit from rate rises.’

The Which? Best Rate tables highlight the top deals on 1-year, 2-year, 3-year, 4-year and 5-year fixed-rate savings bonds. Our fixed-rate cash Isa Best Rate tables cover the same periods.

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