A new fixed-rate bond from one personal and business bank account provider has broken the mould in regards to access to a saver’s cash.
Northern Rock’s new five-year fix carries a 4.3 per cent pre-tax interest rate. However in a turn that is unusual for such a fixed rate savings account, savers can access their money with 180 days notice and not incur any penalties.
This makes the fixed-rate bond an attractive choice for savers who are in search of a high rate of return but don’t want to be locked into an interest rate that may become uncompetitive if the Bank of England begins to raise the base rate. Being able to move funds out of the five-year fix with just six months’ notice enables savers to transition their cash to a more lucrative deal if one arises.
The interest rate paid on the bond also compares favorably to competitors’ products. After taking account of the basic tax rate, the bond pays 3.44 per cent. Similar notice accounts with a 90 day warning limitation can offer as little as just 0.1 per cent after tax.
The majority of these savings accounts are not available to new customers. Moreover they pay much less than no-notice accounts that allow savers easy access to their own money.
Many 30 days’ notice accounts fare little better than their 90 day counterparts. Nationwide’s Bonus 30 account offers a pre-tax return of 0.7 per cent, while the Notice Saver from Yorkshire Building Society offers only 0.35 per cent in after-tax returns on balances equal to or less than £1,000. Likewise NatWest pays a paltry 0.75 per cent on £2,000 for their own 30 day notice account.