Savings rates have started to rise for the first time in eight months, as banks and building societies once again vie for consumers’ cash.

Today Newcastle Building Society launched a five-year fixed rate Isa, paying 5 per cent which allows transfers in, and permits withdrawals, subject to 90 days’ notice.

Andrew Hagger at price comparison website Moneynet.co.uk said: “It’s almost 1 per cent higher than the competition, so it’s unlikely to be available for long.”

Meanwhile, Abbey has launched a new packaged account that pays credit interest fixed at 6 per cent for one year on balances of up to £2,500 – giving customers net interest of up to £120 (for basic-rate taxpayers) over 12 months.The account, which costs £10 per month, offers a range of benefits including annual worldwide family travel insurance (including winter sports), breakdown cover and a £100 interest-free overdraft.

Hagger said: “It’s an attractive looking proposition, but only if you make use of most of the benefits on offer."

After months of declines, evidence that interest rates have started to rise will be welcomed by savers. Research by data provider Moneyfacts shows that the average rate on easy-access cash accounts has risen to 0.71 per cent, up from 0.64 per cent last month. That represents the first rise since rates started falling from their October peak of 3.71 per cent.

Michelle Slade, at Moneyfacts, said: “Savers are reaping the benefits as providers compete to attract their money. Rates on fixed rates bonds have seen the biggest increases, but with so much competition many providers are now moving to improve the terms on their easy-access accounts. In this low interest rate environment, this is great news for savers looking to make the most of their money.”

Birmingham Midshires’ Telephone Extra account pays 3.15 per cent; Coventry Building Society’s Poppy Save has a rate of 3 per cent; the second issue of Principality building society’s e-Saver pays 2.85 per cent; Intelligent Finance has increased its isaver rate to 2.85 per cent; and Sainsbury's Internet Saver has a yield of 2.6 per cent.

Rates on fixed-rate bonds have increased the most. The average one-year bond pays 3.05 per cent, up from 2.79 per cent in March, while the average five-year bond pays 3.95 per cent, up from 2.86 per cent three months ago.

However, with many economists expecting the Bank of England base rate to start rising as the economy recovers and inflation makes a comeback, experts warn against opting for a long-term fixed savings rate.

David Kuo, at financial website Fool.co.uk, said: “If you can afford to lock away your money for a few years then there are some decent rates around, but there is a risk – there always is.The Bank of England is unlikely to hold base rates at 0.5 per cent, so you are better off locking away your money for no more than a couple of years and accepting a lower return in the short-term.”

Skipton has a bond paying 3.85 per cent until the end of February next year, while Ruffler Bank pays 3.76 per cent over 12 months. The minimum deposits are £500 and £10,000 respectively.

Close Brothers has a two-year bond paying 4.5 per cent, but you must have £10,000 to stash away. ICICI Bank, the UK arm of the Indian bank, pays 4.35 per cent over two years on deposits of £1,000 or more.