The "funding for Lending" scheme launched by the Government in August this year designed to encourage banks to increase lending to businesses is having a serious impact on UK savers. With cheap money being made readily available to banks by the government, High street banks currently have no incentive to offer attractive savings rates to UK savers. This trend is not good news for people who rely on savings interest to supplement retirement income. The need to ensure you are getting best value from your savings is greater than ever.
If you are comfortable locking your savings away for a fixed period you can get a much better rate of interest on your money and with inflation running at 2.2% (As at September 2012) it pays to shop around for the best deal. See below for a selection of fixed rate bond deals for November 2012.
Short term fixed rate bonds
United Bank UK are currently offering a 1 year fixed rate bond paying 2.75% Gross/AER with deposits from £2,000. Principality Building Society are currently offering an 18th month fixed rate bond paying interest at 2.80% Gross/AER.
Medium term fixed rate bonds
Vanquis Bank are offering a competitive 3 year fixed rate bond is currently one of the best 3 year rates in the market at a rate of 3.26% Gross/AER with a minimum deposit of only £1,000.
Long term fixed rate bonds
If you are happy to tie up capital for 5 years then Vanquis Bank are paying a rate of 3.71% Gross/AER. Monthly and annual interest options. Minimum deposit of £1,000.
Click here for a selection of our best fixed rate bonds.
Fixed rate bond alternatives
If you are happy to give notice on your savings then the Gilliat 180 days notice account is paying an attractive 2.78% Gross/AER for balances of £50,000 or more.
If you are prepared to tie your money up, there are alternatives to fixed rate bonds known as structured deposit plans which typically have a 3 to 6 year term. These plans are cash based, but they provide the potential of stock market linked returns while protecting your initial deposit. As with fixed rate bonds, these plans are eligible for the Financial Services Compensation Scheme (FSCS) up to £85,000 per person per institution in the event that the deposit taker defaults.
3 Year Deposit Plan
The Investec FTSE 3 Year deposit Plan currently has a target return of 15% on maturity, as long as the FTSE 100 final index level is higher at the end of the term than the initial index level at the start date. If at maturity the final index level is equal or lower you will not recieve the investment return but your original capital will be repaid.
More fixed rate bond alternatives.
* Data accurate as at 07/11/2012.
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