Saving rates look set to tumble following the latest cut in the base rate, so you need to act fast if you want to get your hands on a decent fixed rate savings account.
One that is definitely worth a look is Icesave’s Six Month Fixed Rate Savings Account. The Icelandic bank has actually increased the rate on its account by 0.1% to an impressive 6.75% gross (6.86% AER).
The new fixed rate savings account is available as of April 12, and comes with a £1,000 minimum investment.
Lock in longer if you can
Of course, six months isn’t a very long time to lock your money away for and it’s highly unlikely you’ll be able to find a similarly competitive rate when the account matures – economists are already talking of a further base rate cut in the next two months.
So if you’re certain you won’t need to access your money, investing it in a longer term account may well prove more profitable for you. Probably the best one year account around today is Birmingham Midshires’ Direct One Year Fixed Rate Bond, which pays 6.76% gross and has a minimum investment of just £1.
Over two years, Icesave’s two year bond has a 6.6% rate (minimum investment £1,000).
Have you used your ISA limit?
You should only be looking to put money a fixed saving account if you’ve used your entire ISA allowance for the year, as these savings are protected from the tax man’s pervasive grasp.
The Standard Life Fixed Rate ISA is pays a rate of 6% over one year, and with the new ISA regulations in place you can now invest up to £3,600.
Careful how you invest
If you’ve already used up your ISA limit and have a sizeable sum to invest, keep in mind that the Financial Services Compensation Scheme (FSCS) only guarantees the first £35,000 of your savings should your bank go bust.
With no bank able to consider itself 100% safe amid such tumultuous market conditions you may want to consider spreading your savings around and not investing more than £35,000 with each institution.
The problem here is that many banks operate under the same group, so you may unwittingly be putting your eggs in one basket. For example, if you spread your savings between Birmingham Midshires, Halifax and Bank of Scotland, you will still only be covered for the first £35,000.
If you don’t know who owns a particular institution, read the ‘company history’ section on their site for clarification.
