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Fixed-rate bonds could earn sharp customers more

09 July 2007
Higher short-term bond interest rates could earn customers more on their money than a standard savings account, according to

Putting your money in a bond could help you recoup around half a per cent more than saving in an 'easy access' account, said Kevin Mountford,'s head of savings.

Last week, Nationwide and Leeds Building Society launched new ranges of fixed-rate bonds.

Fixed rates are "a good option for consumers", Mr Mountford stressed, with the rates on one-year bonds recently rising above 6.3 per cent.

But the most competitive deals on the market are offered, he said, by Coventry Building Society, with one, two and three-year cash bonds paying 6.55 per cent AER.

Not far behind is Halifax, with bonds paying between 6.29 per cent and 6.6 per cent AER, and the Bank of Cyprus, which also offers bonds with rates above 6.5 per cent.

Nevertheless, the fixed-rate bond is strictly for the savvy customer, Mr Mountford stressed, as savers must watch the bond carefully to see when it matures.

After the savings term ends, fixed-rate bonds revert to a lower interest rate, he explained, when customers should transfer their funds into a higher-earning savings vehicle.

Find out more about investment bonds

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