Banks and building societies are still desperate for our cash, so even though the Bank of England base rate hasn't changed this month, savings rates are rising. Yet too many people are failing to capitalise.
Millions of savers are losing out on hundreds of pounds a year in interest. You could earn an extra £249.01 in interest over the year* by moving your money from an account paying 0.29% (the average instant access rate according to the Bank of England), where you'd receive interest of just £29.36, to ING Direct's Savings Account, which has a rate of 2.75% - this would pay you £278.37.
If you've got money to lock away, you could earn £425.15 in interest over a year, by investing in ICICI Bank's two-year HiSave Account.
It's time for savers to take action and take advantage of the highly competitive rates currently available.
Who are the movers and shakers?
Fixed rate bonds
The main area of activity remains the fixed rate market, so if you have a lump sum you can afford to lock away, a fixed rate bond is well worth considering. Abbey, Alliance & Leicester and Bradford & Bingley, which are all part of the Santander Group, have launched new two-year bonds paying 4.01%.
While highly competitive, these deals aren't quite the best. ICICI Bank's two-year HiSave account is paying a slightly higher rate of 4.20%. It also has a lower minimum investment - £1,000 compared with £30,000 for the Santander brands.
If you don't want to lock your money away for two years, Coventry Building Society's new one-year bond at 4.00% tops the best buy tables. Again, ICICI is worth considering though - its one-year HiSave account is paying 3.90%.
Coventry has also launched a six-month bond at 3.60%, if you want to capitalise on a high rate for a shorter period of time.
Regular savers
The fixed rate bond market isn't the only area which has seen activity however. If you are looking to put money away on a monthly basis, a regular savings account could be a good option.
These accounts pay a fixed rate of interest for a set term - usually 12 months - and A&L's new Premier Regular Saver is paying 7.00%. However there are strings attached to this product. It is only available to those who open a Premier Current Account over the phone or in a branch; you can pay in between £10 and £250 a month (and this must be fixed at the outset - you can't alter the amount you deposit during the term). In addition, withdrawals are not permitted during the 12-month term.
If you pay in the full £250 a month, you will earn £113.75 in gross interest. However, there is a better option.
Top tip
A&L also has another offer to new Premier current account customers. If you apply online you receive a £100 reward (although you don't qualify for the 7.00% regular saver). But, Barclays Monthly Savings Account is paying 6.00%. This account is available to new and existing Barclays' customers and you do not have to have a current account with the bank to qualify. As with the A&L Premier Regular Saver, the maximum investment is £250 per month. So, if you took advantage of A&L's £100 switching incentive, opened a Barclays account as your regular saver and paid in the maximum £250 a month, you'd earn £197.50 over the year.
(For more information on the A&L Premier Account switching offer read our article 'Fancy pocketing £100?'.
Easy access accounts
There has been less activity in the easy access market than elsewhere in the savings world but a couple of providers have increased rates recently.
Sainsbury's Finance has put the rate on its Internet Saver account up by 0.6 percentage points to 2.60% and this is guaranteed to be at least 2% above the Bank of England base rate for 12 months. The offer is only available until June 8 though, so you'll need to act quickly if you want to take advantage. And note, the minimum investment on this account is £5,000.
Capital One Bank has also increased its easy access rate. Its Flexi Saver is now paying 2.65% on balances of £1,000 or more - up 0.3 points. This includes a 1% bonus which runs for 12 months.
Both of these deals are among the best if you are looking for a savings account you can dip in and out of, but you can get a slightly higher rate from ING Direct. Its Savings Account is paying 2.75% and the minimum balance is just £1. Like the Sainsbury's and Capital One accounts, the rate does include a 12-month bonus - in ING's case its 2.22%. Therefore if you opt for any of these deals you should remember to check what rates are available in a year's time as it will probably be worth moving your money again at that point.
Not sure about which type of account to go for?
For more information about the different types of savings accounts available, read our article 'How to choose a savings account'.
Don't forget...
Whichever savings option you choose make sure you keep no more than £50,000 (£100,000 for joint accounts) with any one financial institution to safeguard your cash. For more information read Clare Francis' article 'Who owns who?'
* Based on the average savings balance of £10,122.50 - ICM research.
Disclaimer: Please note that any rates or deals mentioned in this article were available at the time of writing. Products underlined can be applied for directly.
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