Savings accounts 'Perfect storm'

More than 20 providers have increased their savings rates in the past fortnight, according to Moneyfacts.

The financial information group said banks and building societies were offering better savings deals in a bid to attract new cash. This is partly in response to the crisis in the international money markets, which is making it hard for financial institutions to raise money.

"The current situation is like a perfect storm," said Rachel Thrussell, the head of savings at Moneyfacts. "Banks are aiming to bring in cash, while the building societies want to remain competitive."

As a result, interest rates on the best-paying fixed-rate savings accounts have risen above 7 per cent for the first time in six years.

Stroud & Swindon building society tops the "best buy" table with a fixed-rate savings bond paying 7.05 per cent, up from its previous rate of 6.25 per cent.

The society is followed in the table by Birmingham Midshires, which is offering a deal of 6.91 per cent on its internet fixed-rate savings bond.

"It's been quite some time since we have seen the market move at such a pace. This is great news for savers," said Ms Thrussell.