Savings boost as rates hit highest level in two years - check which deals are leading the market

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Savers are being urged to review their accounts as competition pushes fixed ISA rates to levels not seen since 2024

Savers hunting for better returns on their cash have fresh reason to act.

Average fixed Isa rates have surged to levels not seen since 2024, according to data from financial information website Moneyfacts.

At the start of September, the average one-year fixed Isa rate stood at 4.26 per cent. That represents the highest point since September 2024, when the equivalent figure was 4.29 per cent.

Longer-term fixed Isa rates climbed even further, reaching an average of 4.30 per cent. This marked the strongest showing since January 2024, when the rate sat at 4.32 per cent.

Moneyfacts defines longer-term Isas as products with terms exceeding 550 days. The website's analysis is based on average interest rates calculated using a £5,000 deposit, measured at the beginning of each month.

The upward movement signals intensifying competition among providers across the savings market.

Caitlyn Eastell, a personal finance analyst at Moneyfacts, said: "Savers have been handed another welcome boost this month, with fixed savings rates continuing to climb and competition remaining incredibly strong across the market.

"This continued upward movement is positive news for savers who are looking to secure a guaranteed return, particularly those who have been waiting to see if rates could climb even higher.

"It also means that savers who locked away their cash some time ago could now find significantly more competitive options available."

Jazz Gakhal, chief executive of money at Skipton Building Society, urged people not to let inertia cost them. Mr Gakhal said: "For savers, this is a good reminder not to sleep on your savings.

"Many people experience what we call 'money moving paralysis' and leave their money where it is because reviewing their options feels like a hassle.

"But taking a few minutes to check your existing Isa, particularly if you've held it for several years, could make a real difference."

For those seeking a tax-free return, AlRayan Bank's Meteor Savings one-year fixed rate cash Isa currently leads the market at 4.75 per cent. That rate includes a 0.15 per cent Meteor Boost.

The minimum deposit is £1,000, though savers cannot make further additions once the account is open. Ms Eastell warned that savers who withdraw their money early could face a significant penalty, with the expected profit rate falling to just 0.05 per cent.

Savers should also provide instructions for what they want to happen when the account matures. Otherwise, their money will automatically be moved into a default linked or nominated account.

For those willing to lock their money away for longer, GB Bank's five-year fixed-rate bond pays 5.03 per cent on deposits from £1,000, the highest rate currently available in the fixed bond market.

Withdrawals are not allowed during the five-year term, although customers can add more money within 21 days of opening the account and choose to receive interest monthly or annually.

Across the wider savings market, the highest rates available as of September 10 ranged from 4.75 per cent to eight per cent AER.

Regular savings accounts offered the highest headline rates, with Santander and Lloyds Bank/Bank of Scotland paying eight per cent, subject to eligibility requirements and account conditions.

Savers looking for easier access to their money could get five per cent from LemFi, including a bonus. Meanwhile, The Stafford Building Society offered 4.75 per cent on its leading notice account, although customers need at least £25,000 to open it and must give 365 days' notice before withdrawing their money.

Savings rates and products can change quickly, meaning customers should check the latest rate and account conditions before applying.

Isabella Galliers-Pratt, a senior investment director at Rathbones, welcomed the improved rates but cautioned that cash savings carry their own dangers.

Ms Galliers-Pratt said: "However, while cash plays an important role in providing security and funding short-term goals, it is not without risk.

"Inflation remains above the Bank of England's 2 per cent target, meaning cash savings can still lose purchasing power over time, particularly if inflation proves more persistent due to factors such as higher energy prices.

"For those with a time horizon of five years or more, investing can offer the potential for higher, inflation-beating returns over the long term."

It is worth remembering that the value of investments can fall as well as rise. Individual circumstances and appetite for risk will differ from person to person, meaning what suits one saver may not be appropriate for another.