Today's best saving rates

The Bank of England's June rate freeze has prompted a rally on fixed-rate savings deals. Rebecca Atkinson reviews all the best savings accounts on the market.


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Interest rates remain at just 0.5%, and the Bank of England looks unlikely to start increasing this official rate of interest until the outlook for inflation is clearer.

If you've seen your interest rate drop over the past few months then it really is time to find a new home for your money. The good news is that are some decent rates out there - especially with the June base rate freeze prompting a rally on fixed-rate deals.

If your money is stuck in a low-paying account, now really is the time to find it a new home.

FIXED-RATE

Clydesdale Bank and Yorkshire Bank are offering a five-year savings account paying an impressive 5% AER on upfront deposits of £2,000, or 4.5% for three years. A two-year bond, meanwhile, will earn you 3.75%.

Newcastle Building Society is also offering a five-year fixed account paying 5% AER on deposits from £5,000. And from 3 July, it will offer a postal account fixed at 4.5% until August 2011.

Stroud & Swindon has a range of fixed-rate accounts, including a deal that pays 5% until 31 July 2012. You must deposit £5,000 plus to qualify.

Elsewhere, private bank Close Brothers is currently offering a three-year fixed savings account paying 4.75%, or a two-year deal paying 4.5%. Both deals require an initial deposit of at least £10,000, and can only be opened between 20 June and 3 July, subject to availability.

Or, Yorkshire Building Society offers an e-bond paying 4.5% until 31 August 2013 on deposits of £100. It will also pay 4% over three years, or 3.5% over two.

ICICI Bank offers a range of fixed-rate accounts that allow you to fix for anything from six months to five years. You need to have £1,000 to deposit upfront, and the interest you earn varies depending on the term:

HiSave Interest Rates
One-year 3.6% AER
Two years 4.35% AER
Three years 4.35% AER
Four years 4% AER
Five years 4.4% AER

As a general rule, providers are currently rewarding savers opting for longer-term fixed deals with better rates. For example, Halifax has increased the rate of interest on its five-year websaver account to 4.75% AER (up from 4.4%) on deposits of £500. It pays 4.5% for four years or 4.25% for three.

Meanwhile, Birmingham Midshires and Saga both pay 4.35% AER for three and four years respectively on deposits from just £1.


Birmingham Midshires also offers a two-year account paying 4.25% AER on deposits from £1. Kent Reliance also pays this rate for two years, while Barclays has a three-year account also paying 4.25%.

West Bromwich Building Society, meanwhile, offers an E Bond paying 4.15% AER until 31 May 2011 for anyone with at least £5,000 to deposit. Withdrawals or additional deposits are not permitted and you can only manage your account via post or the telephone. It also pays 3.25% for 12 months.

Santander-owned Abbey is offering a two-year fixed-rate bond paying 4.15% AER on balances from £25,000. It also pays 4% over 18 months again on an upfront deposit of £25,000.


Cheltenham & Gloucester recently launched a fixed-rate account paying 4.05% for two years on balances of £50,000. If you have less to save (between £500 and £49,999) you'll earn 3.8%, or if you'd prefer to only fix for one-year you'll earn 3.5% on balances of £100.


The AA also pays 4.05% on its 16-month fixed-rate account.


One-year fixed-rate savings accounts are in high demand at the moment but, sadly, are not as competitive as their longer-term cousins. Skipton Building Society pays 3.87% AER until 28 February 2010 on deposits of £500.

INSTANT ACCESS

If locking away your money isn’t for you, then a no-notice deal might be more suitable for you. Just remember, the interest rate on these accounts is variable so it could decrease down the line.

Coventry Building Society currently offers its special Poppy Save instant access deal paying 3% AER on balances between £1,000 and £250,000. This rate includes a 1% bonus for the first year, so after this time your rate will drop.

This account is great for savers with a conscience, as the Coventry will donate 0.25% of the average balance to The Royal British Legion's Poppy Appeal.

ING Direct now pays 3% AER (up from 2.75%) on its varialble rate savings account. You can open this deal from as little as £1, and there are no penalties or restrictions when it comes to accessing your money. This deal is only for new customers - bear in mind, that interest is paid monthly so you won't benefit from compounded interest. After one year, the rate will fall to just 0.5%

Principality Building Society offers an e-Saver account paying 2.85% AER, including a bonus rate of 1.20% for the first 12 months. You only need a balance of £1 to open this account and there are no limits on the number and size of deposits or withdrawals, although the maximum balance allowed is £1 million. This account can only be opened and managed online.

Intelligent Finance, part of Lloyds Banking Group, also pays 2.85% on its online isaver. There are no withdrawal restrictions and you only need £1 to open an account. Again, you can manage your account online and there is also the option to use your savings to offset your mortgage.

This account guarantees to pay at least 1% above the Bank of England base rate until 31 December 2009. However, be aware that you need to have a mobile phone to set up payment instructions to this online account.

Sainsbury's Finance has an internet savings account that pays 2.8% AER on deposits between £1,000 and £500,000. However, you are only allowed to make three withdrawals during the first 12 months, and after this time the rate will drop to just 0.75%.

Newcastle Building Society offers an Online Saver account paying 2.5% AER on a deposit from just £1. Withdrawals are permitted without any loss of interest.

You can opt for this account to pay your interest on a monthly basis; however, you will need to have a minimum balance of £1,000.

Alliance & Leicester offers an Online Saver deal that pays 2.5% AER variable including a bonus of at least 1% until on 2 August 2010.

Barnsley Building Society also offers an online saver account paying 2.5% on deposits from £1. Again, you can make unlimited withdrawals, but these are subject to daily limits. This deal can be managed online, so you don't need to have a Barnsley branch in your area.

Stroud & Swindon Building Society pays a variable-rate of 2.25% on its postal account on opening deposits of £1,000. The account can only be managed via the post, but allows instant withdrawals of at least £1,000. It also guarantees to pay at least 0.25% above the Bank of England base rate.

NOTICE ACCOUNTS

If you want to make withdrawals but are happy to give your bank or building society notice before you do, then you could get a better rate. FirstSave currently pays 2.5% AER on its 90-day notice account, which can be opened from £100. You can opt for monthly or annual interest payments, but you must have a balance of at least £5,000 for the former option.

Secure Trust Bank, meanwhile, pays a slightly more attractive 3.15% AER on its 60-day notice deal on deposits from £1,000. Bear in mind that you can only make three withdrawals a year from this account.

REGULAR SAVINGS

The credit crunch has not only highlighted the importance of saving, it has also created a financial climate where saving products offer better value than in recent years.


Lloyds TSB, meanwhile, has increased the rate on its monthly saver account to 5%. The deal, which is fixed for 12 months, requires savers to pay in between £25 and £250 each month.

The benefit of this account is that instant access withdrawals are allowed - however, you cannot replace any funds withdrawn.

CHILDREN'S SAVINGS ACCOUNTS

If you have decided to invest your Child Trust Fund (CTF) voucher into a cash savings account, then the Hanley Economic Building Society currently offers an account paying 5% AER which allows you to make additions from £1.

However, as this account can only be managed via a branch, you might be better off with Yorkshire Building Society's offering. This pays 3% AER, but includes a bonus of 0.7% for 12 months.

Earl Shilton Building Society pays 2.85% AER, as long as you invest the full £250 voucher plus £10. Or Skipton Building Society pays 2.65% with the minimum addition set at £10.

All the above rates are variable and could change.

If you have already invested your voucher but want to open up a savings account for your child, then Halifax's one-year Regular Saver account pays 6% AER for one-year on deposits from £10.