July 28 2014 Latest news:

In a rare bit of good news for savers, the average interest being paid on a one-year fixed-rate bond has risen to its highest level since August.

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The average rate has reached 2.85pc, according to the number-crunchers at Moneyfacts.co.uk.

There has also been an increase in the number of available accounts. Six months ago, there were 80 one-year bonds on the market but today, there are 101.

“Savers prepared to lock their money away for a year have been given a boost, with the average rate rising to an eight-month high, whilst choice has also increased in the market,” said Moneyfacts spokesman Louise Holmes.

“We have noticed, so far this year, that fixed-rate bonds are a popular choice among consumers looking for suitable savings accounts, indicating that savers are willing to lock their money away in return for a better rate of return.”

But consumers are being warned that they might need to shun some of the larger high-street providers if they want to secure the most competitive deals.

“Many of the top bonds are offered by lesser known names in the savings market and highlight the fact that if savers want to make the most of their money, they may need to look further afield than their local high street,” said Ms Holmes.

She added it was important for savers not to commit more money into fixed-rate accounts than they could afford to do without.

“While fixed-rate accounts offer some of the better rates in the savings market, the majority prohibit savers accessing their funds during the term,” she said.

“Investors must be prepared to tie up their money for the duration of the term to avoid falling foul of strict penalties, such as loss of interest or even account closure.”

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