The tables have been turned on the UK banks! Despite NO interest rate rise since July 07 financial institutions are falling over themselves to entice savers into depositing funds in both short-term and fixed rate savings accounts. Which gives UK savers a golden opportunity to take advantage of the current weakness in the banking system and lock in excellent rates before they evaporate.

The reason for the current situation has been the ongoing credit crunch which has meant that the traditional interbank liquidity markets have dried up as banks seek to reduce market risks. The Market Oracle has been writing about the impending credit crunch for close to a year now, right from the dawn of the US Housing bust that implied a credit squeeze would be unleashed onto the financial markets, without repeating the dynamics of the credit crunch, you may find the articles listed at the end useful.

Selection of Fixed Rate Savings Accounts

Financial Institution	Account	Fix / Instant	Interest rate	Comments
DerbyShire	Fixed Rate Bond	1 Year	6.85%	Prev 6.30%
Halifax	Halifax Guaranteed Reserve	6 months	6.40%	Get 6.61% for over £25k Saved.
Halifax	Web Saver - Fixed	6 months	6.71%	Two months ago the rate was 6.30%
Heritable Bank	Fixed Rate	2 Years	6.70%
Ruffler Bank	Fixed rate Bond	2 Year	6.62%	Expect better rates than these soon.
West Brom BS	E-Bond	1 Year	6.86%	Do not confuse with their Fixed Rate Bonds

When considering depositing into savings accounts, remember that it is entirely possible that at the worst point of the current financial storm that some banks may even go bust, especially those with the greatest exposure to the mortgage market and subprime toxic waste. The problem is we don't know exactly who will be hit the hardest until Mid 2008, but those with large subprime mortgage books are riskier propositions as they can expect to have a greater number of defaults, and in that light to ensure that your savings in any particular bank are no greater than that which are protected by the Financial Services Compensation Scheme (FSCS).

FSCS protection is currently 100% of the first £2000, and 90% of the next £33000. Which effectively means the maximum protection is for £31,700 on savings of £35,000. Therefore £35,000 should be the maximum deposited with any UK financial institution.

More articles on the credit crunch

22 Aug 2007 - UK Housing Market Crash of 2007 - 2008 and Steps to Protect Your Wealth
19 Aug 2007 - Credit Crunch Special
31 Jul 2007 - Hedge Fund Subprime Credit Crunch to Impact Interest Rates
20 Mar 2007 - The United States of Foreclosure - Subprime fiasco to trigger Stock Market Crash
22 Feb 2007 - US Housing Market Crash to result in the Second Great Depression
18 Dec 2006 - Last Warning! Three-Pronged Collapse ... Stocks, Bonds and Real Estate

By Nadeem Walayat
(c) Marketoracle.co.uk 2005-07. All rights reserved.

The Market Oracle is a FREE Daily Financial Markets Forecasting & Analysis online publication. We present in-depth analysis from over 100 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. The Market Oracle does not guarantee the accuracy of the information provided, and does not accept any liability for its accuracy, which is for general information purposes only as a starting point for your own research. Individuals should always consult with their personal financial advisors before engaging in any investment activities.

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