One personal and business bank account provider has recently announced it will be launching a four year fixed rate bond with a best buy of 4.3 per cent.
Secure Trust is gambling on the more than 500,000 savers with fixes that are maturing in October by launching its new 4.3 per cent interest rate four year fix in the hopes of enticing a proportion of those savers. However, even with the high rate of return, with the retail prices index weighing in at a 5.2 per cent inflation rate, it may be a struggle for savers to maximise their returns.
Even the consumer prices index, the more forgiving inflation metric, is above the new Secure interest rate by 0.2 percentage points. This means that, even though the new bond is one of the most lucrative offerings, savers are still technically operating at a loss unless inflation rates begin to recede.
The situation looks even more bleak after tax is taken into account. Basic rate tax reduces the saver to only 3.44 per cent, while higher rate taxpayers will only net 2.58 per cent in returns.
Five year fixes are the only source of better rates currently, where the top rate is currently offered by Saga, with its pre-tax 4.65 per cent bond, though it is only available to those over the age of 55. The next best offer at 4.6 per cent is from AA Savings.
Secure Trust does not permit any withdrawals for the entire term of the bond, but deposits as small as £1,000 to as large as £1 million are acceptable sums for the account.