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Bank of Baroda Max 5-year fixed rate bond 4.90%

Bank of Baroda will be a new name to most UK savers. It’s India’s third largest bank and although this is the first time is has offered savings accounts to the mass market, it has actually operated here in Britain for 50 years.

Bank of Baroda is registered with the Financial Services Authority and is fully signed up to the Financial Services Compensation Scheme so you have exactly the same level of protection as you would with an established British bank or building society: £50,000 on accounts in one name and £100,000 for joint accounts.

This is the market-leading five-year fixed rate bond. The minimum deposit is £500 and you can invest up to £200,000 although bear in mind that only £50,000 is protected under the compensation scheme (£100,000 if the account is in joint names).

Pay in as much as you can afford as you can only make one deposit at the time the account is opened.

Interest is paid on maturity, so this probably isn’t the best option for those looking to use the interest on their savings to supplement their income.

Only open this account if you have savings you won’t need to touch for the next five years as withdrawals aren’t allowed during the fixed term.

Santander 2yr Fixed Rate Savings Bond 3.00% - 3.75%

The rate of interest you earn on this account depends on how much you are looking to invest – the top rate of 3.75% is only available on balances of £25,000 or more.

The bond matures on 1 August 2012 at which point your money will be transferred into an account you have nominated.

As with most fixed rate bonds, you should only consider this account if you have money you can afford to lock away as withdrawals aren’t allowed during the fixed term. If you need to close the account early you will lose 120 days’ interest.

Also, this is aimed at lump sum savers – pay in as much as you can afford when you open the account because you won’t be able to make any additional deposits.

Bear in mind that if you already have money in an Alliance & Leicester savings account, you will have been able to protect £100,000 (£200,000 if you have joint accounts) under the terms of the Financial Services Compensation Scheme as Santander and A&L each had their own banking licence. However, from 28 May 2010, A&L and Santander will share the same licence so if you have accounts with both, the total that is guaranteed will be £50,000 (£100,000 if the accounts are in joint names).

ICICI Bank UK 1-year HiSave Fixed Rate Account 3.10%

Earning a decent return on your savings is hard in the current low interest rate environment and is one of the leading rate among one-year fixed rate deals (you can earn more if you’re prepared to lock your money away for longer). However, there are a number of catches and it won’t suit everyone.

Fixed rate savings accounts tend to pay a higher rate than easy access deals because they are less flexible as your money is usually tied up for the duration of the fixed term. This account is no exception.

The minimum deposit is £1,000 and you cannot make a withdrawal during the one-year fixed term. You can only pay money into the account at the time of opening – no additional deposits are permitted so this is an account for lump sum investors.

Interest can be paid annually or monthly which is good as the monthly option makes it attractive to those who want to use their savings interest to supplement their income.

You can choose to automatically renew your account which means when it matures, your money will be re-invested into another of ICICI’s fixed rate bonds and as an existing customer you’ll receive a bonus of 0.05% on the rate available at the time. You do not have to do this though and if you’d prefer not to, the money will be transferred into the variable rate HiSave account. There are no access restrictions on this account so you can move your savings elsewhere if the rate isn’t competitive.

ICICI Bank UK has an Indian parent company but it is registered with the Financial Services Authority so as with any other FSA-registered savings provider the first £50,000 held with the bank is totally protected under the terms of the Financial Services Compensation Scheme (£100,000 if the account is in joint names).

Nationwide e-ISA 2.75%

If you’re looking for a cash ISA and want to be able to pay money in, or take it out at any time without penalty, this account offers a great rate. If all you want to do is use this year’s ISA allowance there are slightly higher rates available, but if you want to transfer money over that you invested in previous tax years, this rate can’t be beaten (although it can be matched).

However, you must be an existing Nationwide card account customer to qualify for this deal and have either a FlexAccount, CashBuilder Card, Smartcard or Investdirect account. If you don’t have one of these accounts already, Nationwide says it doesn’t mean you can’t have an e-ISA, you’ll just need to open a card account first. In reality, it’s unlikely that many people will do so because there are other competitive cash ISA options available from other providers.

Like many of the leading savings deals, the rate includes a 12-month bonus. However, where it differs is the fact that it is fixed (others are variable meaning the provider can alter it at any time). It is also smaller than many other bonuses at 1% so the rate won’t fall as much after the first year. That said, it will drop to 1.75% and chances are it’ll be worth moving your money again at that point because there will probably be other products available paying a higher rate.

Santander Direct ISA Issue 6 2.75%

If you are looking to make an ISA transfer because you have money sitting in a cash ISA that is no longer paying a competitive rate of interest, this is a great account. Available under both the Santander and Alliance & Leicester brands, the rate is market-leading on balances of £9,000 or more. However, if you are only looking to invest this year’s cash ISA allowance there are better deals available as the rate on balances below £9,000 is a much less attractive 2.00%.

As well as accepting transfers in (not all accounts will allow you to transfer money invested in previous tax years), you can also make unlimited penalty-free withdrawals. Try and avoid taking money out of an ISA though if at all possible as you lose the tax-free status on any withdrawals you make. Therefore, if you need to dip into your savings use non-ISA savings first.

It’s also important to note that the rate includes a large bonus which lasts for 12 months. If you have a balance of more than £9,000 and you qualify for the higher rate of 2.75%, the bonus is 2.25%. If your balance is under £9,000 meaning you earn the lower rate of 2.00%, the bonus is 1.50%. So after a year the rate will fall to 0.50% (whatever your balance) – you should look to move your money again at that point as you’ll probably be able to earn a better return elsewhere.

The other key thing with the bonus is that it is variable which means that even if Santander keeps the ‘go-to’ rate at 0.50% the rate of interest you are earning could change because it could reduce the size of the bonus. (In theory the bonus could also be increased although this is unlikely).

Bear in mind that if you already have money in an Alliance & Leicester savings account, you will have been able to protect £100,000 (£200,000 if you have joint accounts) under the terms of the Financial Services Compensation Scheme as Santander and A&L each had their own banking licence. However, from 28 May 2010, A&L and Santander will share the same licence so if you have accounts with both, the total that is guaranteed will be £50,000 (£100,000 if the accounts are in joint names).

Halifax Direct ISA Reward 2.60%

If you are only looking to invest this year’s ISA allowance, there are higher rates available. However, this is one of the leading easy access cash ISA rates if you also want to transfer money invested in previous tax years.

To qualify for the Reward interest rate, transfers must be made within the first 60 days (unless you have already paid in the minimum balance of £1,000 using this year’s ISA allowance – you can pay up to £5,100 into a cash ISA this year).

The rate applies for 12 months after which it drops to Halifax’s standard Direct ISA rate, currently 0.50%. During the first 12 months, you can only make four withdrawals and a balance of at least £1,000 must be maintained. If you make more than four withdrawals, or your balance falls below £1,000 the Direct ISA rate will apply.

ING Direct Easy Access Account 2.75%

If you’re looking for flexibility, this is one of the most flexible easy access accounts and it is offering a really competitive rate of interest. Why is it so flexible? The rate is available on balances of £1 or more (many accounts will have a higher minimum deposit) and you can make unlimited penalty-free withdrawals and deposits.

There is no branch access but the account can be managed online or over the phone.

 
Unlike most of the leading easy access accounts, there is no introductory bonus. However, don’t assume this means it will pay a highly competitive rate for the long term. The rate is guaranteed for 12 months after which you earn ING Direct’s standard variable savings rate, currently 0.50%. After the first year, it may be worth moving your savings again as you will probably be able to earn a higher return elsewhere.

The guaranteed rate is great in that you won’t see the return on your savings fall over the next 12 months. However, if the Bank of England base rate rises during that time, it won’t increase.

ING Direct is not part of the UK Financial Services Compensation Scheme (FSCS). This doesn’t mean your money isn’t safe. Instead, you are covered by the Dutch scheme which actually offers greater protection than the FSCS. Up to €100,000 (about £85,000) is totally guaranteed – this compares with £50,000 under the FSCS.

Santander eSaver (Issue 2)

There are a cluster of easy access savings accounts paying 2.75% of which this is one. There are other options which offer slightly higher rates of interest, but nevertheless this is a competitive account.



The headline rate is good at 2.75% although be prepared to move your money after the first year as it includes a 12-month bonus of 2.25%.



Interest is calculated daily and you can choose whether to have it paid monthly or annually. The monthly option will suit those looking to use their savings interest to supplement their income.



You can make unlimited penalty-free withdrawals and deposits and access your account 24 hours a day. However, this account is managed online and there is no branch or phone access so it’s only suitable if you’re happy to bank over the internet. That said, you do receive a cash card which enables you to access your money immediately rather than having to transfer it to a current account first. You can withdraw up to £300 a day from an ATM.



Bear in mind that if you already have money in an Alliance & Leicester savings account, you will have been able to protect £100,000 (£200,000 if you have joint accounts) under the terms of the Financial Services Compensation Scheme as Santander and A&L each had their own banking licence. However, from 28 May 2010, A&L and Santander will share the same licence so if you have accounts with both, the total that is guaranteed will be £50,000 (£100,000 if the accounts are in joint names).

Sainsbury’s Bank Easy Saver 2.70%

If you’re a regular shopper at Sainsbury’s the chance to earn double Nectar points for two years will be appealing and, coupled with a competitive rate of interest, this account may seem ideal.

However, there are some catches to be aware of. The double Nectar points offer is conditional of you maintaining a balance of at least £5,000 for two years. This is more than many people keep in their easy access account.

What’s more, while the initial rate of 2.70% is good, it includes a 12-month bonus. After the first year it drops to the standard Easy Saver rate which is much less competitive – currently 0.50%. But you’ll have to keep your money invested for another 12 months if you are to qualify for double Nectar points.

The other things to note about this account are that a maximum of five withdrawals are allowed during the first year. And the rate of 2.70% only applies on balances up to £100,000. If you make more than five withdrawals or your balance exceeds £100,000 you will earn the standard rate of 0.50%.

There are a number of other easy access accounts paying 2.70% or higher which have fewer catches so it really depends on how much you value the opportunity to earn double Nectar points.