Marcus launches 1% fixed-rate bond – but is it worth it?

5 June 2020

Find out how the new Marcus savings account stacks up against its rivals

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Marcus Bank has relaunched its one-year fixed-rate savings account, but is it worth putting your money in?  

The new one-year fixed-rate savings account pays 1% AER on deposits of up to £250,000.

It follows the launch of Marcus's 12-month bond paying 1.45% at the end of March 2020, which was pulled from the market on 7 May.

How does it compare?

The 1% fixed-rate offered by Marcus is less than its easy-access account which currently pays 1.05%.

Ikano Bank currently offers the best rate for a one-year bond and pays 1.21%, according to recent data from Savings Champion. 

This is followed closely by Metro Bank, which offers a one-year fixed-term savings account paying 1.20%.

The third highest rate, offered by The Access Bank UK, Atom Bank and Zenith Bank, is 1.15%.

Our guide on the best savings rates highlights all the top offers on the market. 

Will locking your money away get you a higher return?

When it comes to savings, the general rule of thumb is that you can get higher returns if you lock your money away for longer.

However, new research has found that the difference between the top one-year and five-year fixed-rate deals has plummeted since January 2016.

The average one-year fixed account pays just 0.94% while the average five-year bond pays 1.33%, a difference of only 0.39%, according to Moneyfacts. 

Rachel Springall, finance expert at Moneyfacts, says: “The difference in rate offered on one-year and five-year bonds has fallen by two thirds between January 2016 and today which is a huge change. This means there is less incentive for savers to choose a five-year bond over a one-year option.

This lull in interest rates for longer fixed-rate products is unlikely to improve in the short term.

“Unless savings providers need to use savers’ deposits to fund their future lending, rates are not expected to improve drastically any time soon, so a good deal may not last very long if it becomes filled quickly,” she says.

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