Principality BS offers best buy two-year fixed rate bond

One provider of personal and business bank accounts recently topped the best buy tables with their new savings product.

With its new 4 per cent interest rate, Principality Building Society’s two-year fixed rate bond is now king of the hill after uprooting former best buy provider Yorkshire Building Society.

After the basic tax rate, the new two-year fix from Principality nets a 3.2 per cent rate of return. For those taxpayers who pay the higher rate, the return is a more modest 2.4 per cent after tax.  Principality also offers a 3.9 per cent before tax monthly income option as well – which may prove attractive for pensioners looking to increase their income through savings.

Savers looking for the next best rate will have to turn to fixes with longer terms.  The current three-year fixes that are competitive are from Barnsley, Dunfermline, Cheshire, and Yorkshire building societies for 3.95 per cent before tax – or 3.16 per cent after the basic rate reduction.

In order to qualify for Principality’s 4 per cent rate savers, need to make a minimum deposit of no less than £500.  While the maximum limit on deposits is the sum of £2 million, in the unlikely event of the building society suffering a catastrophic failure, only the first £85,000 would be protected under the Financial Services Compensation Scheme.

Savers are allowed to close their bond early if they are willing to forfeit 180 days’ worth of interest.  However the building society permits no withdrawals during the two-year term of the bond.

Available to savers who wish to open the bond by post, online, or in-branch, management of their account can only be subsequently handled either by post or in branch.

In addition to its top two-year fix, Principality also offers the top three-year fix with a rate of 4.26 percent.  This just edges out the 4.25 per cent offered by Kent Reliance.  Moreover Principality has the second-best five-year fix with its 5.01 per cent rate of return; the only other bond available with a higher rate is BM Savings’ 5.05 per cent fix.

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