Savers continue to be rewarded for tying up their cash in fixed-rate bonds with returns of up to 5 per cent, but instant access accounts still offer as much as 3.3 per cent.
The gap between the top fixed and instant access rates has narrowed slightly in recent weeks, though both still offer a significant premium to the 0.5 per cent base rate.
The highest fixed rates are on five-year bonds, with 5.3 per cent from Yorkshire Building Society the current market leader, according to Moneyfacts, the rate service.
But some easing in competition and lower “swap” rates – which influence fixed-rate pricing – means longer-term bonds are off their previous highs, according to David Black, banking consultant at Defaqto, the research firm.
He prefers one or two-year bonds, where Saga (at 3.75 per cent) and the AA (4.35 per cent) offer the best deals.
As well as paying a premium to instant access rates, these shorter-term bonds may appeal to savers not wanting to be locked in when interest rates start to rise again.
Most of the top variable-rate accounts include introductory bonuses, so savers should be prepared to switch to a better rate when the bonus period ends.
West Bromwich Building Society’s Branch Bonus account pays 3.35 per cent, including a 0.6 per cent bonus, but this can only be opened in branches and allows two withdrawals a year.
Citibank’s Flexible Saver offers 3.3 per cent, including a 2.25 per cent bonus.
Moneyfacts named Birmingham Midshires and Bath Building Society as the providers that have offered the most consistent savings returns over the past three years.
