Review of the week: ICICI Bank HiSAVE 5 Year Fixed Rate Account

As savers scrabble to find accounts paying a real return on their money, we take a closer look at a five-year fixed rate bond that’s paying 5.00%.

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Savers are feeling understandably squeezed at the moment, as a low base rate and high inflation combine to give their returns a good kicking.

Although inflation fell during May, with the Consumer Price Index dropping from 3.70% to 3.40%, inflation is still hurting the nation’s savers. According to moneysupermarket.com research, basic rate tax payers need an account paying at least 4.26% if they are going to benefit in real terms from their savings, and it’s even harder for higher rate and 50% taxpayers.

Fixed rate bonds are paying some of the best returns going, so we’ve taken a closer look at one of the highest-paying accounts on the market.

What's the deal?

If you have a lump sum of at least £1,000 that you’re willing to lock away for five years, the ICICI Bank HiSAVE 5 Year Fixed Rate Account is paying a market-leading 5.00%, which is available monthly or annually.

There’s no maximum amount that can be held in the account, although as a general rule it makes sense to save no more than £50,000. . 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).

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.

Any catches?

Like pretty much every fixed rate bond, you can’t make any further deposits or withdrawals once it’s been set up. There’s also no early closure, so once your money’s in, you lose access for the full five years.

It’s also worth noting that this account can only be managed online, so this may not be the best choice for technophobes or people who prefer to use a branch.

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Verdict

If you’re fed up with pitifully low returns on your savings then this account is paying one of the best rates going. However, not everyone is going to be happy to lock their money away for a full five years.

Whenever base rate finally moves, it can really only go up, so there’s a risk that during the five-year period this rate will become uncompetitive but you won’t be able to shift your cash.

If you want a high rate without fixing for that long, the ICICI Bank HiSAVE 3 Year Fixed Rate Account pays a competitive 4.15%, that’s market-leading for a three-year account.

Top tip

Not everyone can afford to lock their money away for as long as five years, so it’s important to be confident you won’t need to access it during that time.

It’s worth keeping some emergency funds in an easy access account so that you have some rainy day money ready to hand. We recommend a minimum of three months-worth of household outgoings as a financial cushion in case anything happens.

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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