Small Banks have the Best Deals for Savers

Recently it has become clear that savers who are willing to tie up their money for one or two years are likely to get better deals with smaller banks.

Shawbrook has a one-year fixed-rate bond at 1.95 per cent before tax, while it's 18 month bond pays 2.05 percent.

If you're prepared to put your money into a two-year fixed rate bond, Close Brothers can offer you 2.4 per cent and Shawbrook Bank can offer 2.3 percent.

You can access these accounts by post and your money is covered by the Financial Services Compensation Scheme.

These new rates have made them the most lucrative two-year savings accounts around, previous top rates included the 2.1 percent offered by the State Bank of India and the 2.05 percent offered by Britannia. 

The experts impression of saving trends, backed by Bank of England figures, show that savers have been giving up on fixed-rate bonds in droves. With money held in fixed-rate bonds down £40 billion on a year ago.

Conversely the amount in easy access accounts has risen by £52 billion, mostly down to the awful bond rates offered by large high street banks.

Lots of the high street giants pay less for one-year-fixed-rate deals than they do for easy access accounts elsewhere. 

HSBC pays just 1 per cent, NatWest 1.15 per cent and Barclays 1.2 per cent.

Halifax, Santander and Nationwide all pay just 1.4 per cent.

Two-year deals are not much better, at as little as 1.25 per cent with HSBC, while the best deal is 1.7 per cent from Nationwide.

The main consideration before embarking on a fixed-rate bond is that you're sure you are happy to tie up your money in the long term.

During the period your money is in the bond, you usually can't make any withdrawals. Although some bank or building societies will allow this, if you're prepared to pay a hefty fee, which can be anything from a penalty fee to a loss of the interest you've accrued over the last month.