One personal and business bank account provider recently threw down the gauntlet with a new 4.05 per cent return on their 2 year fixed rate bond, sources say.
Offering a new best buy, Vanquis Bank’s 4.05 per cent interest rate (3.24 per cent after basic tax is taken into account) two year fix has eclipsed the previous market leaders Clydesdale Bank and Yorkshire Bank, whose 4 per cent offerings had formerly held the top spot. The new Vanquis offering also far outstrips the online two-year fixed rate bond currently available from Halifax with a pre-tax rate of 3.85 per cent.
The bond, which is only available to online banking customers, may not be amended once it is taken out, and while interest paid can be either on an annual or a monthly basis, the new two-year fix’s minimum deposit is £1,000, which may make it accessible to many middle-income families looking to grow their savings pots.
Topping 4 per cent in interest is a vital goal for medium term fixes in the current economic landscape of the UK, doubly so because of the expectations of the Bank of England’s Monetary Policy Committee that inflation will finally be decreasing below its target 2 per cent rate in 2012. This could spell disaster for savers who, after fears of record increases in the cost of living, sought out inflation-linked fixed rate bonds, though the possibility of seeing modest gains in concrete terms for savers with products that exceed 4 per cent in interest is quite high indeed – even in spite of maddeningly low rates of return on many savings products.
In related news, the Post Office recently announced it had made the decision to withdraw its own inflation-linked savings product, as the demand for the offering turned out to be quite strong indeed.