Making the most of your savings: time to go fixed rate?
With financial experts predicting that the base rate looks set to stay at 0.5% for a long time to come, now could be the time to turn to a fixed rate savings account. Traditional variable rate savings accounts are doing little to boost the value of savers' money and so the promise of a guaranteed return over a set period of time is looking more and more tempting.
Variable rate accounts offer a simple solution for those who want to be able to access their cash at the drop of a hat but many make the mistake of choosing an account that looks good at the outset and then failing to monitor the rates going forward. The fact is that savings account providers can change rates whenever they like so those who prefer to put their money into an account and forget about it until it's time to make a withdrawal could only be getting the benefits of the advertised rate for a few months.
Generally speaking the best rates can be found if savers are prepared to put their money into a fixed rate account for a set amount of time. It's only really option if they can be sure that they won't want or need to access their money during that period, though - some accounts won't allow access to funds during the agreed term, while the ones that don't will impose a stiff penalty.
The one worry many people have when thinking about locking in to a fixed rate savings account is the possibility that interest rates will suddenly jump after they've already agreed to commit their money to a the lower rate, meaning that they're missing out on a better deal elsewhere.
The reality is, however, that it's impossible for the layman to accurately predict what's going to happen in the future with regard to interest rates and waiting around indefinitely to see what's around the corner is counter-productive. Best indications suggest that the base rate will remain low for the foreseeable future so fixed rate looks like a good bet going forward for those who can afford to lock some money away for a set period and reap the long-term rewards.
About the Author
Anglo Irish Bank provide a savings service in UK, Ireland, Isle of Man and USA, with competitive interest rates on savings accounts, bonds and offshore savings
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