SAVERS looking for a top rate are being warned to act quickly after inflation fell by more than expected.
Savings rates have fallen since August when the Bank of England cut its base rate from 5.25% to 5%.

The rate is a key benchmark used by high street banks to set the interest rates it offers customers on borrowing and savings.
Inflation this week fell to 1.7% , the latest official figure reveal, which could prompt the central bank to slash rates again.
Rachel Springall, finance expert at MoneyFactsDaily, said savers may wish to “act quickly”.
She explained: “Those looking for guaranteed return may wish to act quickly to grab a top rate as there are expectations for interest rates to come down over the next couple of months.”
“Savers need to prepare themselves for interest rate cuts, so if fixed-rate bond or fixed Cash ISA rates plummet, savers may wish to choose a longer-term deal to secure a competitive rate for the next few years.”
A fixed-rate on savings means you have an account that locks away your money for a set period of time in exchange for a guaranteed interest rate.
It’s also known as a fixed-term bond. You may be able to choose how long your savings are locked away for, or it may be an amount of time set by your lender.
Locking in now could mean you secure e higher rate before they are cut.
These type of accounts are different to an easy-access account which lets you get hold of your cash immediately, but has a rate of interest that can change at any time.
Last month, and for the first time since January, the average interest rates for both fixed-term and easy access savings accounts declined across the board.
What’s on offer
There are only a few fixed deals currently on the market offering interest of 5%.
Two of the 5% deals are one-year fixes from the Union Bank of India.
The first offers 5% interest on a minimum deposit of £1,000 while the other offers the same on a minimum investment of £5,000.
The third is from Conister Bank which also offers 5% interest on a minimum deposit of £5,000 over one year.
There are a number of different savings accounts, but the fixed type often offers the most bang for your buck if you are looking to save money over a long period of time.
That is because if you fixed before a base rate cut your rate would stay the same.
Other examples include notice accounts which offer slightly lower rates in exchange for more flexibility when accessing your cash.
These accounts don’t lock your cash away for as long as a typical fixed bond account.
There are also regular savings accounts and easy-access accounts, which give you quick access to your money at a lower return.
Springall said: “Challenger banks and building societies continue to offer some of the top returns and have the same deposit protections in place as the more familiar high street banks, so there is little reason to overlook them in favour of a well-known brand.
“Whichever account savers decide to open, its essential they pick one that suits their needs, but if it’s an easy access account, make time to review the rate regularly.”
If you are looking to save and do not need access to your money for a few years then a two-year fix might be for you.
The best deal is from Market Harborough Building Society which offers 4.61 interest over a two year period.
However, you will have to invest a minimum of £10,000. Interest on this deal is paid yearly.
If you are looking to stow away your money for away for longer, a three-year fix could also be an option.
The more competitive option on the market for a three-year fix is by Principality Building Society.
It is offering 5% interest on a minimum of £500. With this type of account, the interest is paid on the anniversary of when you opened your account.
Four-year fixes operate just like all other fixed accounts, the only difference is you are kept away from your savings for longer.
Principality Building Society again has the best offer for four-year fixed deals.
The bank is offering 5% interest on a minimum investment of £500.
A cash ISA is a type of savings account that offers tax-free interest on your money.
This means you can earn interest on your savings in a bank or building society without paying tax.
You can save up to £20,000 each year tax-free in a cash ISA.
Virgin Money has the most competitive fixed one-year ISA.
The bank is offering 4.61% interest and the minimum amount you need to pay in a quid.
If you are looking for a two-year fixed ISA, State Bank of India is offering interest of 4.50% but the minimum you need to invest is £1,000.
If you are keen on something more long-term, UBL UK is offering customers 4.31% interest if they create a three-year fix ISA.
What is going on with interest rates?
Experts believe that September’s low rate of inflation could prompt the BoE to cut rates again.
This could single the end of attractive deals on fixed savings accounts, which have been slowly dwindling since the initial rate cut back in August.
Alice personal finance analyst at Bestinvest said that “locking in a top rate now” before the best deals disappear could be a “sensible strategy”.
Inflation, which measures how quickly the prices of things increase over time, fell below the Bank of England‘s 2% target for the first time in three years.
It’s important to note that when inflation drops it doesn’t mean that prices have stopped rising, it just means they are doing so at a slower pace.
The BoE can make changes to interest rates as a way to control inflation and keep it on target.
In recent years inflation has been far higher, creating the cost of living crisis, and the bank responded by hiking rates.
This has been bad news for borrowers especially homeowners with mortgages as interest rates on loans are far higher.
But it’s been good news for those with cash in the bank as rates on savings increased.
But as inflation falls that looks set to go into reverse with saving rates falling.
The BoE started raising its base rate in December 2021 from a historic low of 0.1% as the UK economy emerged from the coronavirus pandemic.
It reached 5.25% but the BoE cut that to 5% in August, marking the first cut since 2020.
How you can find the best savings rates
If you are trying to find the best savings rate there are websites you can use that can show you the best rates available.
Doing some research on websites such as MoneyFacts and price comparison sites including Compare the Market and Go Compare will quickly show you what’s out there.
These websites let you tailor your searches to an account type that suits you.
There are three types of savings accounts fixed, easy access, and regular savers.
A fixed-rate savings account offers some of the highest interest rates but comes at the cost of being unable to withdraw your cash within the agreed term.
This means that your money is locked in, so even if interest rates increase you are unable to move your money and switch to a better account.
Some providers give the option to withdraw but it comes with a hefty fee.
An easy-access account does what it says on the tin and usually allows unlimited cash withdrawals.
These accounts do tend to come with lower returns but are a good option if you want the freedom to move your money without being charged a penalty fee.
Lastly is a regular saver account, these accounts generate decent returns but only on the basis that you pay a set amount in each month.
Types of savings accounts
THERE are four types of savings accounts fixed, notice, easy access, and regular savers.
Separately, there are ISAs or individual savings accounts which allow individuals to save up to £20,000 a year tax-free.
But we’ve rounded up the main types of conventional savings accounts below.
FIXED-RATE
A fixed-rate savings account or fixed-rate bond offers some of the highest interest rates but comes at the cost of being unable to withdraw your cash within the agreed term.
This means that your money is locked in, so even if interest rates increase you are unable to move your money and switch to a better account.
Some providers give the option to withdraw, but it comes with a hefty fee.
NOTICE
Notice accounts offer slightly lower rates in exchange for more flexibility when accessing your cash.
These accounts don’t lock your cash away for as long as a typical fixed bond account.
You’ll need to give advance notice to your bank – up to 180 days in some cases – before you can make a withdrawal or you’ll lose the interest.
EASY-ACCESS
An easy-access account does what it says on the tin and usually allows unlimited cash withdrawals.
These accounts tend to offer lower returns, but they are a good option if you want the freedom to move your money without being charged a penalty fee.
REGULAR SAVER
These accounts pay some of the best returns as long as you pay in a set amount each month.
You’ll usually need to hold a current account with providers to access the best rates.
However, if you have a lot of money to save, these accounts often come with monthly deposit limits.