Saver of the month: Triodos 3.25% Ethical Savings Bond
For savers wishing to use their money to do some good, Triodos Bank’s five-year ethical savings bond could be just what they’re looking for.
Paying a competitive 3.25% AER, the account gives you the added bonus of knowing that you are supporting organisations that help people and the environment, as Triodos Bank invests in sustainable businesses in fields such as organic farming and renewable energy.
Vanquis Bank offers the next best five-year rate, paying 3.16% AER. On a £5,000 investment the difference would mean £20 less in interest (for a basic-rate taxpayer) over the five-year period.
With competitive savings accounts disappearing fast, locking your money away in a long-term bond could be a good way to ensure you continue to get a decent rate - just make sure you don’t need access to the money before the end of the term.
As is the case with the majority of savings bonds, the Triodos five-year ethical savings bond account does not allow early withdrawals or closures. The ethical savings bond is accessible by post or online. Savers can invest between £500 and £1 million but no additional deposits are permitted.
Although, the bond is offered to UK residents, Triodos Bank is a Dutch institution and therefore your savings are not covered under the Financial Services Compensation Scheme. However, up to the equivalent of €100,000 is covered by the Dutch Deposit Guarantee Scheme.
For more information about the bond go to triodos.co.uk
Where APR is the rate charged for money borrowed, Annual equivalent rate is how interest is calculated on money saved. The AER takes into account the frequency the product pays interest and how that interest compounds. So, if two savings products pay the same rate of interest but one pays interest more frequently, that account compounds the interest more frequently and will have a higher AER.