RBS and NatWest launch new fixed-rate bonds
RBS and NatWest have launched one-year-bonds paying 3.2% interest.
The one-year fix is one of the more competitive deals on the market, beating Santander, Northern Rock and HSBC's best buys.
The bonds are only available for a small window of time - until 12 August and the minimum required deposit is £5,000.
A two-year-fixed-rate bond paying 3.75% is also available, as well as a three-year-stepped-rate bond, which pays 2% for the first year, 4% in year two and 6% in the final year. These bonds also require a £5,000 deposit.
"As interest rates remain at an all-time low, these new highly competitive fixed rate bonds will guarantee consumers with one of the best returns on the high street today," says Phil Sheehy, head of savings at RBS and NatWest.
All of the bonds can be accessed online, by branch or phone.
Its two-year fix however, is only beaten by the Post Office's two-year-online bond, paying 3.96%.
The start date of the bonds isn't until 22 August and deposits before then will only earn interest at 2%. The accounts are also only available to the banks' existing customers.
The banks' new launches come just days after Nationwide launched an 18-month fixed rate bond and prove the fixed-rate market is seeing a lot of activity, says Peter Chadborn, partner of IFA Plan Money.
"I suspect that the worrying effect of increasing inflation combined with frustratingly low interest rates has been the catalyst for a number of fixed-rate deposits coming to the market."
Despite the difficult savings environment, Brits are still managing to save the same amount of money or more than they did last year, research from Standard Life shows. Its findings reveal 41% of savers have squirreled as much away or more as they did last year.
John Lawson, head of pensions policy at Standard Life, says: "It is encouraging to see that even when the public is faced with increasing financial pressures, with inflation pressures and rising utility costs to name but a few, they're taking the sensible approach by saving their money."
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
A financial adviser who is not tied to any financial services company (such as a bank or insurance company) and is authorised by the Financial Services Authority (FSA). They can advise on financial products to suit your circumstances. All IFAs have to give consumers the choice of paying by fees or commission and have to explain which would best suit the customer in that particular instance. Also, if commission is paid either by the client or the financial service provider recommended by the IFA, the IFA must disclose what that commission is.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.