West Brom launches top fixed-rate bond
West Brom Building Society has unveiled a new top-rate fixed rate one year bond paying 3.55% interest.
Launched today, the rate is fixed until 30 September 2012. Balances must be over £1,000 and can't exceed £250,000.
New as well as existing customers can apply for the bond through the building society's website.
The fixed–rate account is 0.05% higher than its nearest rival's offering: the one-year online bond from FirstSave, which pays 3.5%, and 0.1% higher than Yorkshire Building Society's 3.45%.
"We expect strong demand for this latest product, which offers savers a market leading rate," says Stephen Leonard, spokesperson for West Brom Building Society.
No further deposits or withdrawals are allowed within the year.
With the base rate at 0.5%, savers should take advantage of fixed rates where they can, says Patrick Connolly, spokesperson for AWD Chase de Vere.
"However, it is probably sensible to limit this to one or two year periods, because interest rates may be rising by then, and make sure you use your ISA allowance," he says.
Andrew Hagger, spokesperson for Moneynet, agrees and recommends always making a fixed-rate cash ISA "first port of call to take advantage of the tax benefits".
Hagger also advises swift action before the best deals dry up.
He explains: "Rates have fallen sharply in the last couple of weeks, meaning cheaper mortgage deals, the downside is that we're likely to see these cuts filter through to some fixed rate savings accounts very soon – so grab a good rate while you can."
There are limits to how much you can invest in any tax year. For 2011/12, the limit is £10,680. Of that, the maximum you can invest in cash is £5,340 and the balance of £5,340 can be invested in shares (individual company shares or investment funds). If you don’t take the cash ISA allowance, you can invest up to £10,680 into a stocks and shares ISA.
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.
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.
Also referred to as the bank rate or the minimum lending rate, the Bank of England base rate is the lowest rate the Bank uses to discount bills of exchange. This affects consumers as it is used by mainstream lenders and banks as the basis for calculating interest rates on mortgages, loans and savings.