Money help-desk: Where's the best home for my cash?

Published on Saturday 21 November 2009 14:16

OVER the years I have built up around £55,000 of savings. I am now about to retire and am planning on using the interest from savings to supplement my pension. The rate of interest I am currently receiving is just 0.5 per cent, so I want to find an account paying more than this, but one that also pays interest monthly – any ideas?

AJ, Glasgow

Michelle Slade of Moneyfacts writes:

The highest rates on the market are available on fixed rate bonds, as most restrict access during the term of the deal, typically between three months and five years.

The most competitive rates are available for a five-year commitment, but with the base rate predicted to rise before then, which will likely increase the rates on offer, most savers are only after a one or two-year deal.

Cheltenham & Gloucester is paying 3.44 per cent over one year. If you are prepared to tie your money up for two years then Birmingham Midshires and the AA are paying 4.17 per cent, while Barnsley Building Society is paying 4.70 per cent for a three-year commitment.