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Banks Increase Savings Rates

Wed, 29 Apr 2009

New figures from Moneyfacts have revealed that banks are beginning to offer more generous savings rates . With the Bank of England unlikely to reduce the base rate any lower, banks and building societies are attempting to capitalise by encouraging savers to keep their money with them. The study found that 35 fixed rate deals now offer interest rates of 4 per cent of higher, more than double the number at the beginning of March.

ICICI Bank's HiSave account has topped the best buy tables for a while now, paying 4.1 per cent over two years of 3.9 per cent over one year. For those willing to sign up to longer deals, their five year account pays 4.4 per cent. Indeed, banks are reserving the most attractive rates for those willing to tie themselves into longer-term deals. For example, Halifax's online deal offers an impressive fixed rate of 4.3 per cent on opening deposits of £500, but no withdrawals can be made for five years.

Savers should be careful before agreeing to long term deals as banks impose severe penalties on those withdrawing money if the contract doesn't allow it, with a risk of losing all of your interest with some banks.
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