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Sensational savings rates

Interest rates may be on hold at 0.5%, but there are still ways to make your savings pay

Savers will not have welcomed the Bank of England’s latest announcement to keep the Base Rate at 0.5%, particularly those who were hit hardest by the savings rate slashes of earlier this year. However, there are some decent deals available, particularly if you’re able to lock cash away for extended periods.

Pick of the instant-access deals is the ING Direct Savings Account at 3.2%, but there are much more appealing rates on offer if you can spare the cash for longer. Banks are currently desperate for money and will pay handsomely for a long-term loan of our cash. They also want to attract larger deposits so will pay attractive rates to those who can deposit significant sums.

Below are some of the best rates if you can tie up your money:

One and two-year deals

Provider

Product

Rate AER

Minimum deposit

Term

Coventry Building Society

Poppy bond*

4.30%

£500

2 years

Cahoot

Fixed rate bond

4.20%

£10,000

2 years

National Savings & Investments

Guaranteed growth bond

3.95%

£500

1 year

National Savings & Investments

Guaranteed income bond

3.92%

£500

1 year

* Coventry Building Society will donate 0.20% of the total fund to The Royal British Legion

These rates are significantly higher than minimal commitment, instant-access deals, but they do require significant deposits. If you don’t have the sums required, Barnsley Building Society has competitive one and two-year fixed-rate bonds available to those with just £100 to save, paying 3.1% and 4% respectively.

Three and four-year deals

Provider

Product

Rate AER

Minimum deposit

Term

Principality Building Society

Direct fixed rate bond

5.10%

£1000

4 years

Barnsley Building Society

Online bond

5.00%

£100

4 years

ICICI Bank

HiSave fixed rate account

4.70%

£1,000

3 years

Birmingham Midshires

Fixed rate bond

4.65%

£1

3 years

 

The Birmingham Midshires deal below is a great rate for those without a huge savings pot as it requires only a £1 minimum deposit. At the other end of the scale is the Principality Building Society bond, which demands at least £1,000 but pays an impressive 5.10%.

Five-year deals

Provider

Product

Rate AER

Minimum deposit

Term

Skipton Building Society

Fixed rate bond

5.38%

£500

5 years

Yorkshire Building Society

Fixed rate bond

5.30%

£100

5 years

Halifax

Web saver

5.25%

£500

5 years

 

If you are willing to lock your money away for five years you can benefit from some really attractive rates, especially when you remember that the Base Rate is just 0.5%. Of course, it’s worth considering that although rates are expected to remain low for a while, they will rise eventually, so what looks like a decent rate now might look less attractive a few years down the line should rates rise significantly.

Tax-free Cash ISAs

Provider

Product

Tax-free interest

Minimum deposit

Term

Halifax

Fixed rate ISA saver

4.25%

£500

4-year term

Chesham Building Society

Cash ISA

3.25%

£500

180-day notice period

First Direct

Cash e-ISA

3%

£1

Instant Access

If you haven’t used your 2009/10 tax-free ISA allowance of up to £3,600 in cash savings (£5,100 for the over-50s), it’s worth looking at what’s on offer. You can choose from instant-access deals, notice accounts and fixed-term deals, and all earnings are, of course, tax-free.

So whatever you need from your savings pot, there is an account for you. But with hundreds of products on the market, it’s essential you shop around to find the best deal.

Compare savings accounts with Confused.com >>

All product details correct as of 4/11/09


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