Savings rates provide food for thought

What are you doing with your spare cash at the moment?

Perhaps you’re still spending, doing your bit to get the economy going again. Or has the downturn seen you take a more circumspect view of your finances, either through necessity or choice, and perhaps to think about putting some money away for the future.

Recent research suggests the latter could be the closest to the truth.

Savings levels have been predicted to enjoy a welcome boost over the coming months, as people become increasingly confident the end of the recession is nigh.

However, where best to put the money that you intend to save is the question likely to be on most people’s lips.

The stock markets have rallied so much in recent months that some concerns appear to be surfacing that the best of the recovery might already have been and gone.

In fact, in some more pessimistic quarters, the fear is that a rather unpleasant ‘adjustment’ might be just around the corner.

The general consensus of the financial press appears to be that the best savings rates aren’t particularly attractive at the moment either.

The need to get the economy back on its feet means the Bank of England has kept interest rates at an all time low of 0.5% for eight months in a row.

Borrowers understandably continue to celebrate; with most savers, it is difficult not to commiserate.

Yet, there are signs that an upturn in the rates that banks and building societies are willing to offer on some of their savings products has begun.

The best savings rates at present can be found on long term fixed rate bonds: the average account now pays around 4%, despite having been as low as 2% eight months earlier.

Such accounts involve you locking away your money for a considerable period of time, but if you have plenty of cash that is easily accessible in reserve, you could do a lot worse.