However, all good things must come to an end and there are signs that these leading deals won't be around for long.
Such is the demand, that Alliance & Leicester (A&L) was forced to withdraw its fixed rate deals and Cahoot will stop taking applications for its 6.87% fixed rate bond on May 31. So savers wanting to take advantage of the great deals available shouldn't hang around.
What are the leading fixed-rate savings deals?
The leading fixed-rate savings deal in the UK is the FirstSave Fixed Rate Bond which offers 7.10% for a one year period with minimum deposits beginning at £1,000. FirstSave is part of the First Bank of Nigeria. Currently FirstSave's easy access rate is 6.26% - still one of the most competitive on the market but some way behind its fixed rate offer.
If you are willing to lock away your finances long-term, perhaps because you think that Bank rate will continue to fall forcing savings rates down, FirstSave also offers a two-year and three-year bond at the same market-leading rate of 7.10%. No withdrawals can be made during the terms of these deals.
Icelandic bank Icesave offers a rate of 7.01% over a one-year term. Its Fixed Rate Savings Account is quite accessible as the minimum deposit is just £1,000.
If you have less money than that to invest, the ICICI Bank HiSave Term Deposit is appealing with a rate of 7.0% with minimum deposits starting at just £1. The catch here however, is that you must take out an ICICI HiSave Savings Account to qualify although this does offer a competitive rate of 6.16% guaranteed to remain at least 0.30% above base rate until December 31, 2011.
However, if you prefer to bank with a British provider Principality Building Society's Fixed Rate Bond Issue 92 is competitive at 6.91% until February 28, 2009, though minimum deposits begin at £5,000. Use our savings comparison tool to compare more rates.
Why are these deals disappearing?
The reason why the best savings rates are so much higher than Bank rate at the moment is down to the ongoing credit crunch. The liquidity shortage on the wholesale markets means that financial institutions are still struggling to raise funds for loans and mortgages. As such they are looking for money from retail savers to plug the gap.
However, banks and building societies are having to fight for savers' money and increase their rates to make their deals more attractive than their rivals. With the best rates two percentage points higher than the country's official interest rate, this is obviously a costly strategy so once a provider has attracted the level of funding it needs, it can afford to pull out of the market for a while. This is why many of the leading fixed rate deals don't stay available for long and why savers can't afford to rest on their laurels.
Have your say: Some people on our forum have encountered delays when opening a new account - have you recently switched your savings? If so, was it a smooth process or did you encounter problems on the way? Visit our forum and let us know.
Disclaimer: Please note that any rates or deals mentioned in this article were available at the time of writing.
Rate This Article
Click on a star to rate this article.
