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Savings - fixed rate savings bonds - the best rates in 6 years!

A war is currently being waged in the one year fixed rate bonds savings market, which is great news for savers as we've witnessed fixed rate savings deals at levels not seen for over six years. As the recent sub prime mortgage crisis and subsequent stock market volatility has made it even more difficult for banks to borrow from one another, Financial institutions are now battling it out in an effort to bring in the most amount of money through their doors, by targeting savers to help them raise additional funds.

The results of the ensuing battle in the first few days of September were remarkable - the first shot was fired by Northern Rock's 6.71% one-year fixed rate bond, closely followed by Derbyshire's 6.85%, which was then trumped by West Bromwich's 6.86%.

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It seems that a ceasefire has yet to be called - a week later we saw the launch of Birmingham Midshire's 6.91% 11-month Internet bond, which was quickly surpassed by Stroud and Swindon's 7.05% bond to December next year.

Before rushing to open up a one-year bond, you should consider your tax position first. If you are a taxpayer, then opening an Individual Savings Account (ISA) and using your full yearly allowance should be the first port of call because all of the interest you earn on your savings will be free from tax. Our Mini Cash ISA best buys indicate that the interest rates on mini cash ISAs are currently very attractive and you don't have to lock away your money for a year.

There is no guarantee just how long it will be before the situation returns to some sort of normality in the money markets, so if you want a 7% savings account, make sure you act sooner rather than later!