Fixed rate savings top 6%

By SASCHA HUTCHINSON
Updated:

 

Fixed rate savings accounts are paying more than 6%, following the Bank of England's decision to raise the bank rate to 5.25% last week.

Birmingham Midshires has launched a one year fixed rate bond paying 6.05% as of January 20. Best of all, it requires a minimum deposit of only £1, leaving its competitors well behind. The next closest equivalent is Northern Rock, which pays 5.6%.

But even savers who are prepared to set aside more money and for a longer period of time will struggle to find a rate anywhere near Birmingham Midshires. National Counties and West Bromwich, which require £1,000 minimum, pay 5.86%. And savers with £500 can earn 5.85% with Anglo Irish.

Banks have been slow to pass on last week's rate rise to savers, with only a handful raising their savings rates. Halifax raised its one-year and three-year fixed rate accounts to 5.45% from 5.4% and 5.6% from 5.5% respectively, but did not offer the full 0.25% bank rate increase.

Rates are predicted to rise again later this, so we could see more fixed rate deals topping the 6% mark.

The best rate for instant access so far remains 5.7%, offered by the Landsbank's online Icesave account.

But the Birmingham Midshires rate is great news for savers who are prepared to tie their cash up for a year. The account can be operated online and opened from this Saturday.

For more information visit www.askbm.co.uk

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