Making the most of your savings

During uncertain economic times it has been suggested that the safest thing to do is to save up money and an effective way of doing this is to using fixed rate bonds.

The Nationwide Savings Index for September was recently released and figures revealed an increase of 10 points to 87 - the highest level seen since November 2008.

This index is measured by the Nationwide to capture public opinion on saving, with a higher number indicating greater importance.

The public have made it clear that they are in favour of saving money, so it is no surprise to see many high street banks and building societies reacting to this trend by launching a number of new products.

According to which4u.co.uk, while it can be hard to decide which bond to invest in next, it is also important to pay attention to the date any current bonds mature.

Sam Gooch, head of banking at the comparison website, said: "It is essential that savers keep an eye on their bonds and are aware of the date they mature, or they could lose out on a considerable amount of interest."

He added that many fixed term bonds automatically switch to a standard rate after the fixed term expires, effectively moving funds into a separate product, and many savers fail to set up a new bond in order to benefit from higher interest rates.

Recent research by uSwitch showed that 10 different institutions lowered the interest on these 'replacement' products by up to 0.5%.

Earlier this month, which4u.co.uk published a list of its highest paying fixed rate savings accounts and the best performing products were through Yorkshire Building Society and Barnsley Building Society.

Yorkshire Building Society is currently offering 5.3% on its 5 year fixed rate bonds</a> and 4.65% on its three-year bond, while Barnsley Building Society is paying 5% on it's 4 year bond.

As the Bank of England base rate remains at its historical low of 0.5%, these rates look impressive, will interest rates increase in the near future?

The Bank's Monetary Policy Committee is due to have its next vote in regards to the base rate on November 5th, although drastic changes are not expected any time soon.

Neil Young, chief executive officer of Young Group, said: "Investors expect to see an upward movement in base rate from the current historic low of 0.5 per cent, but that the uplift will be gradual, as you would perhaps expect when emerging from an economic downturn."