One-year fixed savings deals rise to the highest level in almost 10 years

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An increasing number of savers are turning their attention to fixed term savings deals as interest rates continue to rise.

The average one-year fixed bond rose to 1.97 per cent, according to Moneyfacts, its highest level since January 2013.

Meanwhile the average easy-access rate currently stands at 0.7 per cent, up from 0.18 per cent this time last year. 

The gap between easy-access and fixed rates is leading many savers to settle for the latter, according to James Blower, founder of The Savings Guru.

He has seen a big increase in people hunting for fixed rate deals with one-year accounts proving the most popular product on the site for the past five months.

The best one-year deal on the market, currently offered by QIB (UK) pays 3.1 per cent.*

Someone stashing £10,000 in this account could expect to earn £310 in interest over the course of the year.

According to The Savings Guru, in August, one-year rates experienced three times the number of searches compared to easy-access accounts.

Given that more than half of UK savings are in easy-access accounts indicates the momentum shift. 

The best easy-access savings deal on the market pays 1.9 per cent, while the best one-year fixed rate deal currently pays 3.1 per cent. 

Some savers may be looking to lock away for longer. However, they may be left feeling disappointed by the fact that fixing for longer secures little benefit in terms of interest rates.

The gap between the best one-year and five year deal for example is only 0.45 per cent.

James Blower says: ‘There’s not enough there to justify locking away for longer at the moment. I think if you are a saver looking to lock away then a one-year is a good compromise. 

‘The rates are 1.2 per cent higher than the best easy access rate, so there’s a decent extra premium for locking away. 

‘However, it will also give you a chance in 12 month’s time to look again when we expect rates to be higher – so it’s a good compromise where you get a good rate now and possibly a much better long term rate in a year. 

‘Whereas locking in now for long term may see savers looking back wishing they’d waited.’

How to make the best fixed rates go even further

The savings platform, Raisin, is currently home to both the best one-year fix rate deal paying 3.1 per cent and the best five year deal paying 2.55 per cent.

It is also home to the best three year deal paying 2.4 per cent – also offered by Tandem Bank.

Raisin is currently offering This is Money readers the chance to earn an extra £25 when they sign up and deposit £10,000 into one of its savings deals.

This could essentially mean that someone depositing £10,000 into the 3.1 per cent one-year deal, could essentially boost their rate to 3.35 per cent, with the £25 included.

To benefit from the £25 welcome bonus, savers need to sign up via this link.* 

Being a savings platform, Raisin brings together a host of savings providers under one roof.

Savers can therefore manage all their savings account in one place and cut the bureaucracy when moving money between accounts. 

Although, Raisin is not whole of market it tends to offer some of the most competitive rates.