Savers are turning towards fixed-term bonds rather than easy access accounts, new research has found.
Fund supermarket Hargreaves Lansdown surveyed people who use its active savings product – an online savings marketplace that enables people to move money between banks. More than £2bn is saved through active savings.
It found that more than half of its active savings clients opted for fixed term accounts in May, with the vast majority fixing for 12 months or less.
Since the crisis hit, the proportion of cash going into easy access accounts has been steadily falling, and the proportion in fixed accounts growing.
“Fixed rate savings are never the stars of the savings world: they tend to play second fiddle to easy access accounts,” said Sarah Coles, personal finance analyst at Hargreaves Lansdown.
“But falling rates have shone a spotlight on their most attractive features, and savers are being drawn by the chance to lock into higher rates.
“Within active savings, the proportion of savers opting for fixed rate bonds has been gradually growing, and in May, more than half of new savings money went into fixed rate savings. For most of these savers, fixed term bonds for 12 months or less offered an attractive balance between higher rates and a sensible level of flexibility.
“Overall, UK savers still continue to hold the lion’s share of their cash in easy access accounts. But while we should all have 3-6 months of expenses to hand in these accounts for emergencies, it’s worth considering fixing any additional savings in competitive accounts for the time periods that suit us best.”
Bank of England figures show that fixed rate savings are holding steady at 17 per cent of the savings market, excluding easy access accounts paying no interest and ISAs.
Meanwhile, with the central bank base rate at 0.1 per cent, savings rates continue to fall. According to Moneyfacts, average rates are at their lowest levels since records began.