Choose your fixed rate bonds carefully, experts say

As the difference between the worst and the best is rapidly growing wider, savers need to choose their fixed rate bonds carefully, according to industry experts.

Nowhere is this gap more prevalent than within the range of online one-year fixes currently available on the market.  Halifax’s internet-only fixed rate bond carries a pre-tax interest rate of only 2.55 per cent, yet West Bromwich Building Society offers an identical offering – except its interest rate is a full percentage point higher, at 3.55 per cent.

On branch-based offerings, both Halifax and Barclays offer only 2.5 per cent and 2 per cent interest respectively, and industry experts point out that there are some easy access accounts that actually offer more of a return.  However, Co-op Bank subsidiary Britannia is offering a 3.4 per cent return before taxes, which is matched by Tipton & Coseley Builting Society and also by Tesco’s telephone-managed fixed rate bond.

The top rate on two-year fixes, 4.01 per cent is available from Santander subsidiary Cahoot, though savers have been put off by its high £25,000 minimum deposit.  Alternatives include the Post Office’s 3.96 per cent fixed rate bond, and Tesco’s 3.9 per cent offering.

Savers looking for the most lucrative three-year fixes are recommended to take a look at Whiteaway Laidlaw, based in Manchester, for their 4.26 per cent interest rate.  High Street C& also came highly recommended with its 4.25 per cent three year offering as well.

Industry experts recommend that you ensure you have no need of the money you deposit in a fixed rate bond for the entirety of its term, as the majority of financial service providers will disallow access to your money.

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