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Returns race ahead as banks and societies scramble for our cash

The credit crunch has an upside, it seems.

Exactly a year ago, the Bank of England base rate stood at the 5.25 per cent, the same level as today. However, according to financial analyst Moneyfacts, the interest rates being paid on savings accounts are far higher than they were last February. In the cases of "best buy" accounts, the difference can be as high as 1 per cent.

For example, the best-buy no-notice savings account 12 months ago came from Anglo Irish Bank, which paid 5.55 per cent. The market leader today, from West Bromwich building society, pays 6.55 per cent.

According to Moneyfacts, the need of banks and building societies to raise cash is at the heart of the good cheer for savers.

"It seems that some institutions are favouring a strategy of bringing in more funds via retail deposits, rather than relying so much on funding their lending through the money markets," said Rachel Thrussell, head of savings at Moneyfacts. "This has been a factor in driving rates to such highs for British savers."

She added: "Even if you take into account that some of these institutions have not yet announced their rate decisions after the latest cut in the base rate, a drop of 0.25 per cent will still leave their deals well in excess of those on offer last February."