Fixed Rate Savings accounts have always been favoured by those who have a large sum of cash that they don't necessarily need for a year or two. They have been popular due to the higher interest rates available compared to the abysmal ones offered on Easy Access savings accounts.

For example, if we were to look now at the highest paying Easy Access savings account in the UK, we would be able to get a rate of 1.85% on up to £1 million. However, if you were willing to lock your cash away for one whole year (where you would be unable to access it) you could get a rate of 3.01%.

This is clearly a significantly higher return which is worth taking advantage of if you weren't planning to access the cash for a while anyway. Then the longer you stash your cash away, the higher return you can usually get.

The reason behind this is because it gives the bank some security knowing that they have this money in their account for X number of years, and so they can lend to their other customers with a good amount of comfortability.

All of this sounds good though, so why am I saying that these fixed-rate accounts are worthless?

Well, the current interest rate in the UK is now at 1.75% and this was increased to slow the ever-growing inflation rates we are seeing across the country right now.

Inflation rates are currently sat at 10% at the time of writing and are expected to reach as high as 13% before they begin to fall again. As such, I would highly anticipate that the Bank of England is going to be increasing this interest rate several times over the next year.

This is obviously priced in when looking at the interest rates of 3% and upwards on the fixed rate savings accounts available at the moment. However, I would expect that easy-access savings accounts in 12 months would likely be around this 3% price point.

This is, of course, me just speculating about how I anticipate the Bank of England to react to the ongoing cost of living crisis.

Personally, I think that putting your money into a fixed rate savings account now would probably be quite foolish considering that interest rates are going to keep going up. This also means that banks are likely to push up their fixed rate interest rates ever-so-slightly.

Often it is better to keep the cash you are holding for a long period of time in different accounts. Inflation devalues the cash held in any bank account over the years, and therefore the only cash that I keep in savings accounts is as follows; 

• Emergency Fund - as I will need to access this without notice potentially

• House Deposit - this is held within a Lifetime ISA though, which gives a 25% bonus on your deposits into the account (up to £1,000 bonus per tax year)

Alternatively, I keep any excess money in investment accounts to outpace inflation. This ensures that I am not seeing too much value disappear.

As always, this is not financial advice, and these are just my thoughts on this topic. Please do your own research before making any financial decisions.