Daily Mail

Snap up a fixed deal or miss out

- By Sylvia Mor­ris sy.mor­ris@dai­ly­mail.co.uk Business · Finance · Money Tips · Personal Finance · Banking · Lifehacks · Hargreaves Lansdown · Bank of England · England

SAVERS are be­ing urged to grab a fixed-rate deal be­fore they dis­ap­pear.

One-year fixed sav­ings rates have crept up above 1 pc in re­cent weeks, with new banks leap-frog­ging each other to sit at the top of the best buy ta­bles.

Com­pe­ti­tion has im­proved slightly be­cause savers know they can earn 1.15 pc with the Government’s own sav­ing arm.

How­ever, ex­perts ad­vise savers to move quickly as th­ese deals may not last if Na­tional Sav­ings & In­vest­ments (NS&I) cuts its rates.

Savers piled £45 bil­lion into easy-ac­cess ac­counts in just four months over lock­down, while the amount in fixed-rate bonds fell by £3.5 bil­lion.

But de­mand for fixed bonds is now soar­ing again, according to Har­g­reaves Lans­down and the Sav­ings Cham­pion web­site.

Rates on fixed-rate bonds tum­bled when the Bank of Eng­land base rate fell from 0.75 pc to 0.1 pc in March be­cause of the pan­demic.

Yet with in­fla­tion now at 1 pc, many will at least guard your sav­ings from the erod­ing ef­fects of the ris­ing cost of liv­ing.

There are 77 fixed deals that match or beat in­fla­tion, com­pared to just three easy-ac­cess deals, according to Mon­ey­facts.

James Blower, founder of Sav­ings Guru, says: ‘If you are happy to tie your money up, get a fixed-rate bond now.

‘But don’t go for more than one year as the ex­tra in­ter­est you earn for ty­ing your money up for longer is not worth it.’

Of­ten you earn just 0.1 pc more if you tie your money up for two years rather than one year — worth just £10 on each £10,000.

NS&I’s easy ac­cess Di­rect Saver and In­come Bonds pay 1 pc and 1.15 pc re­spec­tively.

It also has a range of fixed-rate bonds avail­able to ex­ist­ing cus­tomers, with a oneyear deal pay­ing a near-top 1.1 pc.

In July, NS&I upped the amount it wants to bring in from savers to £35 bil­lion from a pre­vi­ous £6 bil­lion to help fi­nance its Covid-19 ex­pen­di­ture and sup­port savers.

At the start of the fi­nan­cial year from April to June, it at­tracted a huge £14.5 bil­lion. That could rise to nearly £30 bil­lion by the end of this month if it re­peats the per­for­mance.

NS&I will then have to choose be­tween cut­ting its rates or rais­ing its tar­get fig­ure.

The Government bank has to give savers two months’ warn­ing that their rate is fall­ing. So if it’s the for­mer, the an­nounce­ment could come in the next cou­ple of weeks.

Top rates do not last long be­cause new banks are not look­ing to bring in vast sums.

Oa­knorth’s one- year bond at 1.21 pc, Char­ter Sav­ings Bank’s 1.22 pc, along with Se­cure Trust’s 1.16 pc, were on sale for just over a week.

Best rates on one-year fixed-rate bonds now in­clude Paragon Bank and United Trust Bank at 1.2 pc and Al­lica Bank at 1.16 pc.

Don’t bother with the big banks — they are pay­ing as lit­tle as 0.2 pc fixed for a year.

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