UK banks cut interest rates on their fixed rate bonds

Providers of personal and business bank accounts in the UK seem to have chosen this week to reduce the rates of return on their fixed rate bonds, industry experts recently reported.

Saga reportedly shaved one-half of a percentage point from its one year fix, lowering its pre-tax interest rate of 3.5 per cent to a flat 3 per cent for new customers, a rate of return that is actually not as rewarding as the current leader of the easy access savings account best buy.  Likewise Shawbrook Bank has done away with its most lucrative deals as well.

Some providers are still offering good rates, such as the 3.6 per cent offered by FirstSave and the 3.55 per cent available from Aldermore Bank and Investec.  However, some of these offerings, such as the Investec fix, requires a relatively weighty £25,000 minimum investment, possibly rendering it less accessible than other deals, such as the 3.4 per cent fixes that both Chelsea and Yorkshire building societies currently haveon offer.

Those interested in making a commitment of two years to a fixed rate bond, you can get rates as high as 4 per cent from FirstSave and Investec.  Other high offers include Lloyds TSB-owned C & G which has a 3.8 per cent two year fix available as well.

While fixed rate bonds with terms of three years or more are available on the market, many investment experts are reticent to recommend them to savers in light of the economic instability in the eurozone.  Moreover, rates of return on these longer-termed fixes are only marginally better than more short-term fixed rate bonds available from financial service providers in the UK.

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