Top rates to kickstart the New Year savings habit

piggy bank

There are several new top paying fixed-rate savings accounts on the market.

Firstsave has launched a one-year fixed-rate bond at 3.25% before tax (2.6% after tax), available over the internet.

The rate puts it marginally ahead of Barnsley, part of Yorkshire Building Society, which last week put the rate on its one-year telephone and internet-based bond up to 3.2% (2.56%) for new savers.

Other good deals include Northern Rock at 3.15% (2.52%), which is fixed until 20 January 2012.

Banks and building societies change the rate they pay to new fixed-rate savers frequently, as they use these bonds as a tap to attract money in, and turn if off when they have pulled in sufficient funds.

It means savers have to be extremely vigilant when signing up for a deal. Last week both HSBC and Norwich & Peterborough dropped the rate they pay to new savers on their one-year bonds.

Even these top rates of interest are bad news for savers, with inflation, as measured by the Retail Prices Index, currently at 4.7%.

Basic-rate taxpayers need to earn 5.87% before tax just to match the rise in the cost of living, while 40% taxpayers need 7.83%.

The top rate on offer from mainstream banks and building societies is 4.75% (3.8%) on a five-year fixed-rate deal from Coventry Building Society.

Leeds Building Society's new Online Access 3 account pays 2.55% before tax (2.04% after) and you have easy access to your money without penalty at any time. The rate includes a 0.5 before-tax percentage point bonus paid until 31 January 2012.

It is available for new and existing customers.

The building society also launched two fixed-rate bonds yesterday. The three-year bond pays a competitive 4% while the five-year bond pays 4.5%.

An extra perk is that they allow customers access to 25% of the funds without notice or a penalty at any time.

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