Savers who stay loyal to their providers could potentially risk missing out on the most competitive returns as some rates dip, a financial information website is warning.
The average one-year fixed bond rate on the market was 3.99% at the start of October, while the top rate paid 4.45%, according to analysis by Moneyfactscompare.co.uk.
A year ago, the top one-year fixed bond rate was 4.95% and the average rate was 4.30%.
The average three-year bond in early October was 3.92%, having edged down from 3.93% a year earlier. The top three-year fix in early October was 4.45%, down from 4.72% in October 2024.
Five-year bonds have remained more steady over the past year.
The top five-year fix on the market in early October was 4.64% – unchanged from the top rate a year ago.
The average five-year rate on the market in early October was 3.96% – which is higher than a year ago at 3.81%.
Average interest rates were based on a £10,000 deposit as at the start of the month.
The change over the past year in the top one-year bond means that, for example, a year ago, someone with £10,000 to put away for a year could have earned £495 on their pot, but now with the top rate they would get £50 less, at £445.
Caitlyn Eastell, a spokesperson at Moneyfactscompare.co.uk, said: “Inflation remains a significant burden which makes it harder for savings to generate real returns. It’s crucial that savers are proactively searching for the most competitive deals, especially if they pay below 3.8% (as the rate of Consumer Prices Index inflation in August was 3.8%).
“Loyalty is not always rewarded, and savers could be missing out on a significant cash bonus.”
Ms Eastell added: “With the future of interest rates still up in the air, some savers may see a greater incentive to lock their cash away for longer.
“Plus, fixed bonds remain a great way to beat base rate cuts.”
