Best buy savings bonds top 4%
Bonds rise over 4% as savers seek to make most from savings
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Wednesday, 13, May 2009 09:20
Best buy savings bonds are now rising over the four per cent mark.
While the Bank of England looks set to maintain the base rate at 0.5 per cent for the coming months, banks and building societies are increasing their rates on bonds for those able to tie up funds for longer.
Heading the field, according to data from moneysupermarket.com, is the ICICI Bank HiSave Fixed Rate Account now offering 4.40 per cent.
Barclays, Nottingham Building Society, and Coventry Building Society, along with the Santander brands Abbey, Alliance & Leicester and Bradford & Bingley, have all launched bonds over four per cent.
A saver investing £10,000 in the Birmingham Midshires two-year 4.25 per cent fixed rate bond would earn £425 in interest over as year - compared to just £29 in an average instant access savings account, which now stands at 0.29 per cent
Kevin Mountford, head of banking at moneysupermarket, said: "Competition in the fixed rate bond market is really heating up, and savers looking to invest a lump sum for a fixed period can take advantage of some great rates."
He added with the low interest rate environment hitting savers hard, there is a greater need than ever to ensure the best return possible on money.
However, he warned those locking funds away in a fixed term bond do need to be a bit careful.
"The leading fixed rates currently have terms of between three and five years. But the danger of locking your money away for this long is that you could find yourself stuck on an uncompetitive rate when interest rates start to rise again," Mr Mountford said.
"With the base rate at an all-time low, savers should only be looking to fix their savings rate for a year or two."
| Provider | Account (Terms & Conditions Apply) | Term | Minimum Deposit | Maximum Investment | AER |
|---|
| ICICI Bank | HiSAVE Fixed Rate Account | 5 Years | £1,000 | No maximum | 4.40% |
| Halifax | Fixed Rate Web Saver | 5 Years | £500 | £9,000,000 | 4.30% |
| West Bromwich BS | E Bond 22 | 1 Year | £5,000 | £1,000,000 | 4.30% |
| Birmingham Midshires | Fixed Rate Bond | 2 Years | £1 | £10,000,000 | 4.25% |
| New launches | | | | | |
| Barclays | Fixed Rate Savings Bond | 3 Years | £25,000 | £500,000 | 4.25% |
| Nottingham BS | Fixed Rate 67 | 2 Years | £1,000 | £250,000 | 4.15% |
| Alliance & Leicester/Abbey/Bradford & Bingley | Two Year Bond | 2 Years | £30,000 | £2,000,000 | 4.01% |
| Coventry BS | Fixed Rate Bond (116) | 31/08/2010 | £1 | £250,000 | 4.00% |
Source: www.moneysupermarket.com 11/05/2009