Secure a great savings rate now!

With interest rates on savings accounts continuing to plummet, now is the perfect time to fix your savings.

You've probably guessed by now that I'm a big fan of saving. Whether it's because my dad has drummed the importance of saving into me ever since I was born, I don't know. But the idea of not having any savings to fall back on in an emergency terrifies me.

Of course, while interest rates on many savings accounts are rapidly approaching 0%, the incentive to save is no doubt diminishing for many of us. And as times get tougher, even finding spare cash to put in a savings account is becoming more difficult.

But as I mentioned in this article, having a nest egg to fall back on is now more important than ever.

Protect your savings

Finding a way to protect our savings against falling interest rates has become increasingly tricky. So that's why I think one of the best solutions is to lock into a fixed-rate bond.

Sure, they won't suit everybody's needs because once your money is locked away, you won't be able to get it out again until the bond matures (unless you pay a penalty). But on the other hand, you'll have the reassurance that the interest rate on the account isn't going to suddenly shrink.

Grab a better rate today!

Of course, you could argue that if you didn't lock into a fixed rate bond a month or so ago, you've already missed the boat when it comes to the best interest rates.

And while yes, rates have come down significantly over recent months - you could have secured a rate as high as 7% AER back in November - I still don't think it's too late to sign up to a fixed rate bond.

So let's check out how the best rates on fixed rate bonds currently fare:

*To earn interest annually.You'll need a deposit of at least £5,000 to get interest paid monthly.

Coming out on top is ICICI's HiSAVE Fixed Rate Account which pays 3.9% AER for one year. This is ideal if you don't want to lock away your funds for a significant length of time.

FirstSave is also offering a one year bond, but at a slightly lower rate of 3.6% AER. Of course, the downside for both of these accounts is that you will need at least £1,000 to qualify.

Alternatively, if you're looking for an account which allows you to start saving from just £1, you could plump for either Bank of Cyprus' 50th bond, or Coventry's Bond 30 -- offering rates of 3.9% and 3.7% respectively. But you will need to be prepared to lock your funds away for three years.

The longer the better?

Given the current economic outlook, locking your funds away for three years or more might sound tempting. After all, you'll have the reassurance that your interest rate won't fall during that period.

But even so, I'm not entirely convinced that's the best solution right now. It's impossible to predict what will happen in the next few years, and locking up your funds for three or four years will come with risks. You may find during that time interest rates start to climb again, and what you thought had been a competitive deal no longer is.

So while I do think fixed rate bonds are a good choice right now, I would say a one year bond is probably a safer bet than a three year bond.

If you are searching for a one year bond and the ones I mentioned above don't tickle your fancy, you might prefer the sound of Coventry Building Society's one year fixed rate bond at 3.25% AER. Alternatively, Nationwide has a one year e-bond at 3.15% AER.

So whatever you do, just make sure you don't give up saving all together! And don't forget, if you are planning to choose a fixed rate bond, you'll need to act fast!

 More:  Can you bank on the FSCS? | Why your mattress makes a bad bank

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