Nationwide tops tables with new two-year bond
Nationwide is offering customers a two-year fixed-rate Loyalty Bond paying 3.8% interest.
The bond is available in-branch to anyone over the age of seven who has held a Nationwide savings account, FlexAccount or mortgage for at least three months.
The account has a maximum balance of £5,000 or £10,000 if it is a joint account.
"The fixed-rate market continues to be a competitive place for savers looking to tie their money in for a fixed period at a rate of interest that won't change," says Richard Marriott, Nationwide's head of savings.
"The launch of this account provides existing Nationwide customers with a market-leading two-year rate, demonstrating our commitment to offering long-term good value savings accounts."
The Moneywise verdict
This is a great account for Nationwide customers, it's only a shame the maximum balance is so low.
Just make sure you utilise your ISA allowance first, because after tax this account is only paying 3.04% for basic-rate taxpayers and 2.28% for higher-rate taxpayers.
Santander's one-year fixed rate ISA beats that with a rate of 3.5% as long as you can deposit more than £2,500.
But if you are a Nationwide customer and you've utilised your ISA allowance snap up this account.
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.