SAVERS who want to get a top rate fixed 5% savings account are being encouraged to act quick.
Fixed rates have been falling quickly and saving experts have warned that fixed rate saving accounts paying over 5% could dissapear soon.
Since the base rate was cut to 5% last week a number of lenders have cut the rates of their deals.
For example, Access Bank had a two-year fixed-rate account paying 5.06% but this has now been cut to 4.9%.
Myron Jobson, senior personal finance analyst, interactive investor, said top savings rates are on “borrowed time”.
“Barring any economic shock, the only direction for interest rates is down, which means Britons are likely to earn less on their savings going forward,” he explained.
“The simple message for savers is to act quickly to secure the best deals before they disappear.”
“Those who can afford to lock away money for at least five years or more should consider investing for the potential of long-term, inflation-beating returns that far exceed current savings rates.”
With this is mind it might be worth having a shop around to find what deals are currently offering 5% on savings.
There are still a number of fixed rate deals on the market offering above 5% on their savings, but you will have to act quick because experts do not believe they will last for longer.
For example, Investec Bank is offering 5.04% on its fixed one year savings account, with a minimum investment of £1,000.
Elsewhere. Virgin Money is offering 5.05% on its fixed one year Cash ISA with a minimum investment of £1.
There are currently no offers on fixed rate savings deals over a two, three or four year period above 5%.
The closest was from Birmingham Bank, which is giving savers a two year fixed bond at 4.91% with a minimum investment of £5,000.
Here are the best deals rated 5% and above, according to Moneyfactcompare.co.uk.
With a fixed rate savings account, you lock away your savings for a set amount of time at a set interest rate.
It’s also known as a fixed term bond. You may be able to choose how long your savings are locked away for, or it may be an amount of time set by your lender.
In light of the recent base rate cuts, Rachel Springall at Moneyfactcompare.co.uk said savers sitting on the fence to invest their cash with a fixed rate bond may wish to do so quickly.
SARAH cole head of personal finance at Hargreaves Lansdown explains why you might want to fix
The days of 5% savings rates are numbered. We ‘ve seen a few impressively hanging on above 5% in recent weeks, but this was always going to be a brief period in the sun, as the Bank of England cuts rates and the banks price in more cuts in the coming months and years.
It means that if you won’t need some of your savings for at least a year, it’s worth considering getting a fixed rate while you can, so you can still be enjoying some great rates long after the Bank of England has taken an axe to the base rate.
“The top rates are not guaranteed to sit on the shelf for long,” she said.
“Those waiting for their bond to mature and cannot yet grab a new deal would be wise to brace for impact as rate cuts could be on the horizon.
The Bank of England base rate cut is expected to slowly trickle through the savings market over the coming weeks and, while this typically impacts variable rates, the consequences can also lower interest rates on accounts that guarantee returns, like fixed bonds.”
If you are trying to find the best savings rate there are websites you can use that can show you the best rates available.
Doing some research on websites such as MoneyFacts and price comparison sites including Compare the Market and Go Compare will quickly show you what’s out there.
These websites let you tailor your searches to an account type that suits you.
There are three types of savings accounts fixed, easy access, and regular saver.
A fixed-rate savings account offers some of the highest interest rates but comes at the cost of being unable to withdraw your cash within the agreed term.
This means that your money is locked in, so even if interest rates increase you are unable to move your money and switch to a better account.
Some providers give the option to withdraw but it comes with a hefty fee.
An easy-access account does what it says on the tin and usually allow unlimited cash withdrawals.
These accounts do tend to come with lower returns but are a good option if you want the freedom to move your money without being charged a penalty fee.
Lastly is a regular saver account, these accounts generate decent returns but only on the basis that you pay a set amount in each month.
Switching bank accounts is a simple process and can usually be done through the Current Account Switching Service (CASS).
Many high street banks and building societies are signed up and there is a full list on the CASS’ website.
All the hard work is done for you, so you do not have to worry about remembering to switch all of your direct debits.
You simply need to apply for the new account you want to open and the new bank will tell your existing one that you are moving.
Before switching there are a few things that you should do, such as choosing a switch date and transferring old bank statements to the new account.
When you are switching be sure to read all of the terms and conditions of the new account to make sure it meets your needs.
Also factor in what other perks might come with opening up the account, such as the savings rates we previously mentioned.
Martyn James, consumer expert, said: “Switching accounts can be a great way to make some money or earn some extra cash, but the devil is in the detail.
