There are signs that some savings rates may finally be moving upwards.
Interest rates on shorter-term fixed rate savings bonds are gradually creeping up again.
Competition in the one- to three-year markets has seen rates increase since the start of the year.
However, rates on longer-term bonds have declined slightly, making them even less attractive.
Whether the increases mark the beginning of a longer upswing, with the banks and building societies no longer able to borrow cheap money from the Bank of England, remains to be seen.
What is clear is the top rate on a one-year fixed rate (currently 1.95%) is well above the top instant access savings account rate (currently 1.50%).
What’s changed?
Here’s how the top interest rates on fixed rate savings accounts on smaller deposits (maximum £10,000) available today compare to the rates back in January.
|
Fixed rate period |
Top interest rate in January 2014 |
Top interest rate now (May 2014) |
|
One year |
1.95% |
1.95% |
|
18 months |
2.02% |
2.05% |
|
Two years |
2.40% |
2.40% |
|
Three years |
2.71% |
2.75% |
|
Four years |
2.91% |
2.86% |
|
Five years |
3.25% |
3.11% |
|
Seven years |
3.52% |
3.50% |
In addition, Raphaels Bank has recently launched a 15-month bond paying 2.04%.
The best buys
So where should you put your money? Here are the top rates across the different time periods, starting with one-year to 18-month accounts.
|
Account |
Interest rate (AER) |
Minimum deposit |
Access |
|
Bank of London and the Middle East 18-Month Fixed-Term Deposit |
2.25%*+ |
£50,000 |
Online |
|
Shawbrook Bank 18-Month Fixed Rate Bond |
2.05% |
£5,000 |
Online, post |
|
Raphaels Bank 15-Month Fixed Rate Bond |
2.04% |
£5,000 |
Branch, post |
|
Shawbrook Bank One-Year Fixed Rate Bond |
1.95% |
£5,000 |
Online, post |
|
Islamic Bank of Britain Sharia-Compliant 12-Month Fixed Term Deposit |
1.90%* |
£1,000 |
Online, phone, post, branch |
|
Raphaels Bank 12-Month Fixed Rate Bond |
1.90% |
£5,000 |
Branch, post |
|
1.90% |
£20,000 |
Online |
*Anticipated profit rate
+Lower interest rates available for smaller deposits
And here are the two-year rates.
|
Account |
Interest rate (AER) |
Minimum deposit |
Access |
|
Bank of London and the Middle East Two-Year Fixed-Term Deposit |
2.50%*+ |
£50,000 |
Online |
|
Close Brothers Two-Year Premium Gold Fixed Term Bond |
2.40% |
£10,000 |
Online |
|
Shawbrook Bank Two-Year Fixed Rate Bond |
2.30% |
£5,000 |
Online, post |
|
Islamic Bank of Britain Sharia Compliant Fixed-Rate Deposit |
2.30%* |
£1,000 |
Online, branch, post, phone |
|
Axis Bank UK Fixed Deposit Account |
2.25% |
£10,000 |
Branch, post |
*Anticipated profit rate
+Lower interest rates available for smaller deposits
And now three years.
|
Account |
Interest rate (AER) |
Minimum deposit |
Access |
|
3.00%*+ |
£50,000 |
Online |
|
|
Shawbrook Bank Three-Year Fixed Rate Bond |
2.75% |
£5,000 |
Online, post |
|
ICICI Bank HiSAVE Fixed Rate Account |
2.70% |
£1,000 |
Online, phone |
|
Close Brothers Three-Year Premium Gold Fixed Term Bond |
2.70% |
£10,000 |
Online |
|
FirstSave Fixed Rate Bond |
2.60% |
£1,000 |
Online |
|
Axis Bank UK Fixed Deposit Account |
2.55% |
£10,000 |
Branch, post |
*Anticipated profit rate
+Lower interest rates available for smaller deposits
For longer-term options, bearing in mind that rates aren't as great as they were a few months ago, take a look at The best fixed rate savings accounts.
Alternatives
There are several alternatives to fixed rate accounts, many of which will pay better rates, at least in the short term. You may have exhausted them already, which is why you're reading this.
[SPOTLIGHT]If you haven't, then you might want to look at the likes of the TSB Classic Plus current account, which pays 5% on balances of up to £2,000 and the Nationwide FlexDirect current account, which also pays 5% on balances of up to £2,500 for a year. The beauty of current accounts is they offer instant access to your money.
Happy to take on a bit more risk in search of a greater return? Then peer-to-peer companies such as RateSetter, Zopa and Lending Works allow you to lend money to other people. And you could earn up to 6.10% over five years.
Lastly, don't forget Cash ISAs. If you haven't used your allowance, take a look on what's on offer. You'll find more on all the above options in our handy guide Where to earn most interest on your cash.
More on savings:
The best fixed rate savings accounts