Icesave cuts interest rate on savings account

Icesave, a UK savings account offered by Landsbanki, last week lowered the interest rate on its popular savings account to 6.05 per cent.

When emailing customers about the drop in interest rates on the savings accounts, Icesave suggested that customers take out a fixed-rate savings account instead. The account offers 6.7 per cent fixed interest, regardless of reductions in the UK base rate.

With the continuing instability in the global markets, many investment experts are suggesting that short-term fixed-rate savings accounts, containing less than £35,000, could be the safest bet.

Rachel Thrussel of Moneyfacts explained that fixed-rate accounts were a safe investment. “These accounts offer good value at present, and once you’ve signed up you will not be hit by the further anticipated downward fluctuations in base rate,” she said.

Icesave isn’t the only bank offering high interest rates, particularly on fixed-rate savings accounts. The interest rates offered across the board are the best offered in the last seven years.

West Bromwich is paying 6.55 per cent on their instant access account while Anglo Irish Bank and the West Bromwich building society are paying 6.75 per cent on their short-term fixed-rate accounts.

“Since the credit crunch kicked in, it is short-term money the banks are after,” says Susan Hannums of AWD Chase de Vere.

In the UK, all savings up to £35,000 are covered by the UK Financial Services Compensation Scheme (FSCS), including accounts offered by foreign banks.