Although the base rate is now level with the rate a year ago at 5.25 per cent, savings rates have actually increased over the last 12 months according to moneyfacts.co.uk.
“Despite the latest cut in base rate, the second in the last three months, fierce competition within the savings accounts
market and particularly the battle for best buy recognition means that savers have the opportunity to grab some great deals at the moment," says Rachel Thrussell, head of savings at moneyfacts.co.uk.
This may be partly because some banks and building societies have not implemented changes to their rate since the most recent Bank of England
interest rate cut on February 7. However, Ms Thrussell explains that, "even if you take into account that some of these institutions have not yet announced their rate decisions post-base rate, a drop of 0.25 per cent will still leave them well in excess of those on offer last February."
This can be seen among several instant access savings accounts
. On February 8 2007, the rate of interest was 5.55 per cent at Anglo Irish Bank, while it was 6.3 per cent on February 11, 2008. Heritable's rate rose from 5.35 per cent in February 2007 to 6.21 per cent in February 2008, while the rate at Birmingham Midshires was 5.5 per cent compared with 5.75 per cent currently.
In terms of fixed rate bonds
, many are now offering 6.5 per cent or higher, up from six per cent or just above in February 2006. Ms Thrussel says: “If you don’t need to have access to your savings for a while, fixed-rate savings bonds also offer good value at present, and once you’ve signed up, you will not be impacted by the further anticipated downward fluctuations in base rate.
“With uncertainty surrounding stock market investments at present and many commentators predicting further rate cuts as we progress through 2008, there are likely to be many savers ready to take advantage of these opportunities.”
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