Top-paying 'pensioner bonds' close today

Savings jar

Savers aged 65 or more have until tonight to open the top-rate bonds on sale from National Savings & Investments. The 65+ Guaranteed Growth Bonds will be withdrawn from sale just before midnight tonight (15 May).

The bonds pay far higher rates than on offer from banks and building societies. The one-year deal pays 2.8% before tax (2.24% after tax) and the three-year version 4% (3.2%).

The minimum investment is £500 and the maximum £10,000 per person per bond - so a married couple could each hold a three-year bond and a one-year bond, making a joint total of £40,000.

Interest is paid at the end of the term, however, so you will see no interest until your bond matures. There is no option to take your interest each month.

Other savings rates

The top one-year bond available to all from banks and building societies comes from Firstsave at 1.9% (1.52%), followed by Kent Reliance at 1.85% (1.48%).

For two years you can earn 2.21% (1.77%) with Paragon Bank or 2.15% (1.72%) with Firstsave, while the top three-year deal is 2.5% (2%) from Paragon Bank.

On easy-access accounts, Virgin Money pays 1.41% (1.13%) but you are limited to making three withdrawals a year. Paragon Bank pays 1.35% (1.08%) with no such restrictions.

On tax-free cash Isas, National Savings & Investments pays 1.5% on its Direct Isa, but you cannot transfer your existing cash Isas into this account. Barclays Instant Cash Isa 1 pays 1.49% on a minimum £30,000, while at Nationwide Instant Isa Saver issue 3 the rate is 1.4%.

If you are willing to tie your money up for a year tax-free, you can earn 1.65% with Shawbrook Bank or 1.62% with Skipton Building Society. Shawbrook, Aldermore and Kent Reliance banks all pay 1.85% for two years.


This article was written for our sister website Money Observer

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