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Five top fixed-rate savings deals
By Rebecca Atkinson
Savings providers are on the verge of pulling their top fixed-rate deals ahead of the anticipated Bank of England base rate cut later this week.On Thursday 5 March, the central bank's Monetary Policy Committee (MPC) will reveal whether interest rates are to be held at 1% or cut to their lowest ever levels. The MPC is expected to vote for a 50 basis point cut on Thursday, although it could go as far as reducing the rate to just 0.1%.Five months of base rate cuts mean savers have increasingly been opting for fixed-rate accounts where they know they can earn a guaranteed rate of interest.However, savings providers have been continually pulling and tweaking rates to reflect the historically low base rate - meaning returns are growing smaller by the day and deals are vanishing all the time. Average fixed-rate AERs have plummeted from nearly 6% to just 2.35% since October, the Bank of England revealed last month. But there are still several fixed deals out there that promise a much better return on your cash.Here are five of the best fixed-rate savings deals currently available:1. Abbey... ...recently stormed into the best-buy tables with a two-year fixed-rate bond paying 4.01% AER.The deal, which pays interest on a monthly or annual basis, can only be opened via an Abbey or fellow Santander-owned bank, Alliance & Leicester, branch - but it is only be available while funds last.Withdrawals are subject to penalty with this deal, so you must be prepared to lock your money away for two years. Also, bear in mind the minimum deposit needed to open an account is £30,000.If you opt for your interest to be paid monthly, you won't benefit from compounded interest and, therefore, the interest you'll actually earn is 3.94%.2. ICICI Bank's HiSAVE account...... is a good choice you have less to save, and the account now pays up to 4.1% AER on deposits from £1,000.This deal is fixed for two years, but ICICI also pays 3.9% AER on its HiSAVE 12-month fixed-rate deal.Neither of these accounts allow early access withdrawals, but you can opt for interest to be paid monthly or annually.3. Bank of Cyprus UK...
...offers a three-year fixed account paying 3.9% AER on deposits from £1 or a two-year bond paying 3.8% AER. Withdrawals are not permitted within the term of the account.The UK arm of the Bank of Cyprus is a member of the UK's Financial Services Compensation Scheme and the equivalent deposit protection scheme in Cyprus. Between the two schemes, British savers are protected up to £50,000.Technically, this means that if the Bank of Cyprus was to fail, you would have to claim 90% of your money back from the Central Bank of Cyprus Deposit Protection Scheme, up to a maximum of ?20,000. You would then have to reclaim your remaining balance, up to £50,000, from the FSCS.4. Chelsea Building Society...
...recently launched a new version of its Winter fixed-rate account. This short-term deal requires a £1,000 upfront deposit, and pays 3.78% AER until 2 October 2009. You can opt for annual or monthly interest, and access is possible via branch or by post.Withdrawals are permitted but you will be hit with a penalty equivalent to 180 days' loss of interest on the amount withdrawn.Chelsea also offers a selection of fixed-rate accounts paying 3% AER. You can fix for 12 months, two years or three years. Again, you'll need £1,000 to deposit upfront to qualify, and withdrawals come with a 180 days' loss of interest penalty charge. 5. Investec Private Bank's... ...High 5 savings account is aimed at people not only looking for a top rate, but also a consistent one. Currently paying 3.54% AER (correct 2 March 2008), this rate changes on a weekly basis to reflect other savings accounts in the market as the High 5 deal promises to always be the average of the top five best-buy savings accounts.This account, while offering savers the ability to get a top rate without having to constantly shop around, won't be for everyone. For a start, you must have at least £25,000 to deposit in order to open this account. And although withdrawals are permitted, you must give three months' notice before you can access your money.
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