Shawbrook Bank bond takes second place in savings tables
Shawbrook Bank has launched a two-year fixed-rate bond paying savers who can put away at least £5,000 interest of 2.10% AER.
The 2 Year Fixed Rate Bond - Issue 18 has entered the best buy tables near the top, but is beaten by My Community Bank's 2 Year Fixed Term Deposit account, which pays 2.25% AER.
However, more money can be paid into the Shawbrook account – up to £2 million, compared to £15,000.
Moreover, My Community Bank (MCB) is a credit union and as such its products are only available to members with a 'common bond' - in the case of MCB, members must live or work in the London borough of Brent or be involved in the South Asian community in the UK.
Savers also have more choice in how they open and manage the Shawbrook bond - online, by phone or through the post. My Community Bank's offering can only be opened online.
Withdrawals are not permitted from the Shawbrook account and interest is paid annually.
James Blower, director of savings at Shawbrook, said: "This new offering sits perfectly alongside our other recently issued 3 and 5 Year Fixed Rate Bonds and 95 and 120 Day Notice Accounts, giving our customers a competitive selection of savings products to choose from."
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.
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.