Savers who are able to tie up their money for a year or more are finally being rewarded with some higher interest deals.
Online bank DF Capital launched a one-year bond offering 1.45 per cent last week, for savers with more than £1,000 to put away.
This time last year the best paying one-year bond was from Paragon Bank at 1.2 per cent. But if you are willing to tuck your money away for even longer there are better offers to consider.
Uphill struggle: Online bank DF Capital has launched a one-year bond offering 1.45 per cent for savers with more than £1,000 to put away
Islamic bank QIB (UK) is offering a three-year bond that pays 1.77 per cent. Savers willing to leave at least £1,000 untouched for four years could get 1.81 per cent with lender Zopa.
Rachel Springall, a finance expert at savings scrutineer MoneyFacts, says: ‘There has been a noticeable uplift to one-year fixed bonds – with the new DF Capital bond topping the table at 1.45 per cent.
It also has a 15-month deal paying 1.5 per cent. But higher rates can be found if savers are comfortable with locking their money away for longer.’
She adds: ‘Challenger banks are taking market-leading positions in the savings market.’
Although rates are improving, none beat the current rate of inflation. The Consumer Prices Index (CPI) measure of inflation rose by 2.1 per cent in the 12 months to July. The Government target is 2 per cent.
Prices have been rising in recent months, partly due to issues with supply chains and the distribution of goods.
The Bank of England has warned that inflation could rise further still in the coming months.