A falling base rate doesn't necessarily mean bad news for savers. Take a look at this top savings account.
The base rate may have dropped twice since December, but there's still some good news out there for savers. If you have £1,000 or more to stash away, you can't go far wrong with a great savings account from Kaupthing Edge.
Never heard of them? Kaupthing Edge is the UK arm of Kaupthing Bank which hails from Iceland. Kaupthing is certainly not the first overseas bank to garner popularity with UK savers. It follows in the footsteps of Icesave, another Icelandic export, which has already got a firm foothold in the UK savings market with a range of excellent online savings accounts.
Other foreign banks in the UK savings market include Indian bank, ICICI and Nigeria's FBN Bank, both of which offer attractive online products.
But Kaupthing Edge surpasses all these, so let's take a look at the account in more detail.
A Great Rate
Kaupthing offers a cracking interest rate of 6.50% AER, putting it firmly at the top of the best buy tables for instant access savings. I think you'll agree that's a pretty impressive debut into the UK savings market. The account is managed online which means lower operating costs for Kaupthing and therefore a higher rate for you.
Even better, the rate is guaranteed to be at least 0.30% higher than the Bank of England base rate until 1 February 2012. I like accounts which offer an interest rate guarantee because it suggests the bank has at least some commitment to offering a competitive account both now and in the future. And as a new player in the UK, Kaupthing should be keen to build a solid reputation with savers over here by keeping its rates competitive in the long run.
There's nothing worse than being lured in by an eye-wateringly high headline rate only to find a few months down the line the bank has cut it far below its competitors. A rate guarantee gives a little reassurance that the account won't simply fade into the background later in the year.
Access isn't a problem either. You can dip into your savings as often as you like without suffering any withdrawal penalties. Some accounts have begun offering very attractive rates but penalising withdrawals heavily. I'm pleased Kaupthing doesn't resort to these measures.
As long as your balance doesn't slip below £1,000, you'll continue to enjoy a high rate. But be warned: if your savings fall below four figures, the interest rate will drop to 0%. If you don't think you can manage that, Kaupthing won't be for you.
Fixed Rates
If you decide to go for a Kaupthing savings account, you'll also have the opportunity to open a fixed term account. As long as you can afford to lock away at least £5,000 for six months, one year or three years, you'll enjoy a decent fixed rate between 6.70% and 6.86% AER.
So, all things considered, I think this is a pretty good selection of accounts. I'll finish with a final thought on how safe savings with Kaupthing are. Ever since the crisis at Northern Rock, the security of deposits has been high on the agenda for savers. Kaupthing is yet to prove itself in the UK, so I can understand if some of you may be less than keen to put your money with a relatively unknown bank.
However, Kaupthing Edge deposits are held by a UK company, Kaupthing Singer and Friedlander Ltd and as such they are protected by the Financial Services Compensation Scheme (FSCS). That means, up to £35,000 of your savings - or £70,000 if you have a joint account - are safeguarded were Kaupthing to go bust. In other words, Kaupthing savings accounts have exactly the same protection as other UK ones.
So don't let that put you off. If you're looking for a savings account with a highly competitive rate, then Kaupthing Edge is a great place to start.
More: Is Saving With Icelandic Banks Safe? | Check out the market-leading savings accounts at The Motley Fool Savings Centre.