Lock your cash into a fixed rate deal for a red-hot savings rate.

Savers have seen their rates slashed since last Autumn, as the BoE dropped the Base Rate from 5% to a significant low of 0.5%. With average instant-access savings rates of below 1%, it's hard to get a healthy rate of return when you are taking tax into account, especially for higher-rate taxpayers. Which makes it more significant that you don't linger on your present savings rate if your supplier has cut it significantly in the last half a year or so. This isn't time for faithfulness in the savings arena with few really standout deals available.

Top-paying accounts

If a higher rate of interest is your concern, you must consider a fixed rate bond, which pays a pre-arranged raised rate of interest over a 12-month term. In this market, these kinds of savings accounts pay the top rate by some margin.

Also, as Bank of England Governor Mervyn King lately said that rates could remain low for another year, now might be a wonderful time to fasten into a high savings rate. However, the disadvantage with fixed rate bonds is you need to be ready to tie up your cash for the entire 12 months to truly benefit from the deal. The publicized interest is mostly only payable if you do not make any withdrawals for the entire year - if you do you could lose a complete month's interest. So these accounts are only truly acceptable for people that don't need access to their money for the entire twelve months, for instance, folks who've already got a surplus of savings in a flash access account. This pick of the fixed rate savings accounts is ICICI Bank's HiSave Fixed Rate Account. Its one year deal pays 4% while the 2 and three-year accounts pay 4.35%. All need a minimum investment ofandnbsp; 1000. Abbey's one year bond pays 3% on balances over andpound;1 and the two-year deal pays 4.01%.

If you believe you could need to access your cash in the subsequent twelve months it is perhaps better to search for a best paying instant access account.

The pick of these is ING Direct's savings account which pays 2.75% on balances over andpound;1.

Tax free savings But even the best paying immediate access savings accounts look less tasty when you're taking tax into account.

ING's 2.75% rate of interest for instance drops to 2.2% after tax and just 1.65% for 40% taxpayers. But if you have not used up your yearly ISA allowance you are able to save up toandnbsp; andpound;3,600 a year tax free ( set to rise in the subsequent tax year to andnbsp; 5,100 ). ING Direct and Halifax now offer ISAs paying 3%*.

Whatever kind of savings account best meets your requirements, don't languish on your present deal if it is not ok. Switch now for an improved rate.

* Rates correct at 02 / 06 / 2009.

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