Why I'd choose a fixed rate Isa despite the lower rates: SYLVIA MORRIS

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Normally, I’d advise savers looking for a new account to opt for one of the top-paying options around.

But the market for savings products is a bit more nuanced at the moment – and requires a different tactic to earn the most interest over the long term. That is because hundreds of thousands of savers who are coming off a

one-year fixed-rate Isa in the next couple of months face a stark choice.

Option one: move your money from a fixed-rate account to an easy-access one to enjoy the same top rates that you have had for the past year or so. 

The best fixed-rate account now pays just shy of 4.5 per cent, whereas savers who locked in a one-year deal last year would be earning just north of 5 per cent. 

To get a 5 per cent plus deal now, you need to opt for an easy-access account, with the top rate coming from Chip at 5.25 per cent including a short-term bonus.

> Check the best cash Isa rates in our savings tables 

Falling rates: The best fixed-rate account now pays just shy of 4.5%, whereas savers who locked in a one-year deal last year would be earning just north of 5%

But I would be tempted to opt for a slightly lower rate with another fixed-rate account – if you are happy to tie up your money again. 

You may earn less interest, but at least you know how much you will earn over the next 12 months and will be protected from any further rate cuts.

Of course, if rates rise over the next year, you will miss out – but I think this is unlikely. The general market consensus suggests they could fall to as low as 4 per cent by the end of the year.

As the Bank of England base rate falls from its current 4.5 per cent, so will easy-access Isa rates. 

The top fixed-rate accounts could also start to disappear. However, if you do go for another fixed-rate account, I urge you not to just roll over with your existing provider. 

Shopping around is crucial, as some fixed-rate deals are rising while others are falling.

Charter Savings Bank has come out with a rate of 4.4 per cent, and Close Brothers edged its rate up to 4.45 per cent yesterday. 

In contrast, Virgin Money, usually among the top payers, now offers just 4.1 per cent, down from 4.52 per cent last month.

If your current rate is not among the best, see if you can transfer your Isa to another provider.

But top rates don’t stay around long – Secure Trust offered 4.45 per cent on its one-year Isa but it was only available for less than two weeks.

Rates offered on online accounts vary between a top 4.45 per cent with Close Brothers – though you need £10,000 minimum to open this – to 3.8 per cent from Sainsbury’s Bank – a difference of £130 tax-free interest over the year for savings of £20,000.

Other top online rates, fixed for a year, include Hampshire Trust Bank and OakNorth Bank (both at 4.41 per cent), Charter Savings Bank (4.4 per cent) and Zopa Bank (4.4 per cent).

In the High Street, the top rate is 4.36 per cent from Kent Reliance, or 4.32 per cent from Coventry BS. At the other end of the scale is Santander, paying a lowly 3.6 per cent.