Review of the week: ICICI Bank HiSAVE 3 Year Fixed Rate Account

Published:
08 January 2010
Topic:
News,Money,Savings

With the base rate held for the tenth consecutive month and no sign of it moving in the foreseeable future, times continue to be tough for savers. However, the good news is that the leading savings accounts are paying significantly more than the 0.5% base rate.

Fixed rate bonds continue to offer the highest returns and are well worth considering if you have savings you won't need to dip into for a few years.

You can earn 4.70% - 4.20% more than the base rate - if you can lock your money away for three years. On £10,000, that means £420 more in gross interest each year.

What's the deal?

ICICI Bank's HiSave three-year Fixed Rate Account is paying a market-leading rate of 4.70% which you can choose to be paid annually or monthly.

The minimum amount you can invest in the account is £1,000 with no limit on the maximum, although it is advisable to hold no more than £50,000 with any one provider because that is the level of protection you get under the Financial Services Compensation Scheme (£100,000 if the account is in joint names).

Savers have the option to select an 'auto-renewal' feature in which, at the end of the three year term, your funds will be reinvested into another Fixed Rate Account of the same term. If you don't select this option then your funds at the end of the term will be transferred into a HiSAVE Savings Account which is currently paying a rate of 1.70%.

Any catches?

As with most fixed rate bonds, once you have invested into the account you cannot top it up with further funds or make any withdrawals during the fixed rate period. However, ICICI also offers a competitive two-year bond at 4.25%, so there are other options if locking your money away for three years is a bit too long.

  

This account is also operated online, so those who like to operate their accounts in other ways may be put off by the limited access to this account.

Verdict

If you have money you won't need for the next three years, then this account is well worth considering.

However, think carefully about opting for the automatic renewal at the end of the term. While ICICI's rates are competitive at the moment, there is no guarantee that they will be in three years' time. What's more, you'll then be tying your money up again but your circumstances could have changed during that time and a fixed rate deal may no longer be appropriate.

ICICI does give you the option to drop out of the auto-renewal system at any time, though, so if you think it is something that appeals, it is possible to get out of it further down the line.

Top Tip

When it comes to fixing your savings rate, generally speaking, the longer you can lock your money away for, the higher the return. But most accounts don't allow withdrawals during the fixed term or early closure - so be careful.

If there's any chance you'll need access to the money, keep it accessible - even if it means a slightly lower return.

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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