One personal and business bank account provider has been grilled on the interest rate on one of its fixed rate bonds, as a hidden catch cuts its returns by as much as seven weeks’ worth of interest.
RBS subsidiary NatWest recently rose to second place on the two year fix best buy tables for its 3.8 per cent interest rate offering, and also holds fourth place for its 3.4 per cent one year version of the deal. However, a serious catch is hidden away from savers unless they scour the NatWest website for more details.
NatWest actually only pays 2 per cent on both two-year and one-year fixes until the end of November, which nearly halves the return on the former and cutting the latter by a factor of 40 per cent. However, the full rate of return does last for a full 12 or 24 months from November 29.
Any savers that took up the bonds on their 11 October launch date will face under-performing rates of return for a total of seven weeks. Meanwhile, if these same savers had put their cash in an instant acces account from a competitor, they could have earned more than 3 per cent in interest, said savings analyst Andrew Hagger, who added that such a clause as employed by NatWest is quite the rare bird.
Fixed rate bonds are simple products, Mr Hagger said, indicating that the industry doesn’t currently need savings providers making things more complicated with reduced introductory rates that lead up to the prominently advertised headline rate – especially when the clause isn’t publicised plainly.