Principality unveils two year variable rate bond

Principality has replaced its two year fixed rate bond with a variable rate product.

The new variable rate bond will pay savers 3.3 per cent gross p.a./ AER and is guaranteed not to drop below that rate during its two year term.

Savers can choose to have interest paid monthly or annually and the bond can be opened with a minimum deposit of £500, up to a maximum of £2 million.

Additional deposits can be made while the bond remains on sale.

Principality’s savings manager Kate Murray said: “The variable aspect means the rate has the flexibility to move upwards should interest rates rise within the next 24 months.

“Speculation around this continues, with forecasts varying between mid 2014 and mid 2015, with some analysts even predicting a rise before the end of 2013.”

The bond can be started up online, by phone or at any of the building society’s 52 branches across Wales and the borders.