From: Where to invest a savings lump sum |

The good news

But it's not all doom and gloom. While there is no escaping the fact that, with the Bank of England base rate still at a record low of 0.5% finding returns to match those offered a year or more ago is impossible, fixed rate bonds still offer some of the highest savings rates available.

Provided you are able to tie your money up for a further period of time, you are likely to earn considerably more interest by investing in a fixed rate product than if you opt for an easy access account. You must, however, be prepared to sacrifice some flexibility, as you cannot usually make withdrawals during the term of the bond.

Kevin Mountford, head of banking at, said; "Although you are unlikely to find rates as high as was paid four or five years ago, fixed rate bonds continue to give good levels of returns at a time when interest rates are low - the best rate over five years is currently 4.75% and over one year it is 3.1%, compared to the best easy access account which pays 2.8%."

Whatever you do, don't leave your money where it is when your bond matures, as the chances are it will be moved into an account with a much lower savings rate, costing you potentially hundreds of pounds in lost interest every year.

For example, the top paying four-year bond in June 2006 was from Cheshire Building Society which paid a competitive 5.28%.

However, if you fail to take action when the bond matures you could see your funds move into an account paying just 0.10%, costing you 518 in lost interest on a 10,000 balance over a year.

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