Savings accounts beginning to offer better returns

After months of poor savings account interest rates, investors may be about to reap the rewards of better returns on their money.

Figures have shown that 35 savings accounts are now offering 4 per cent interest, a noticeable increase on the numbers for just two months ago.

Though eager to attract more savers as a way of improving their liquidity, banks have also been reducing interest rates following a series of decisions by the Bank of England to cut the cost of borrowing.

This month, however, saw the Bank hold the base rate at 0.5 per cent, suggesting that the trend to cuts may be at an end.

As a result, several banks and building societies have increased the returns that savers can expect on their accounts.

Kevin Mountford, of Moneysupermarket.com, the personal finance website, said: “Several fixed savings products now offer over 4 per cent with the biggest returns obtained from the longer term options. It shows that the banks still need to attract our money, and if they can lock us in with a fixed product then even better.”

Mr Mountford advised savers to be mindful that base rates may rise in the future: “I suggest looking no further than the one and two year options which still pay up to 4 per cent because the Bank rate goes in cycles and, beyond this, it could start to increase and improved savings rates could well follow.”