Charity Fixed Rate Bonds – November roundup
Fair Investment Company is committed to helping charities get the best interest rates on their savings. See below for our selection of some of the best charity saving accounts available in November 2014.*
Latest notice account deals
With a 30 day notice requirement, Cater Allen’s Asset 30 Account offers 0.65% AER/gross, with a minimum deposit requirement of £5,000. Deposits are guaranteed by Santander Plc. For a higher rate of interest, the Manchester Building Society offers a 60 day notice Business Tracker account which promises an interest rate that will remain 0.65% above the bank of England Base Rate until 30th September 2015. The current rate on offer is 1.15% AER/gross and the account is open for deposits between £10,000 and £75,000.
Latest fixed rate bond deals
The Cater Allen 3 year fixed term deposit plan offers 1.90% AER/gross fixed for three years, for those who are able to tie up their charity savings for longer. The account requires a minimum deposit of £50,000 and deposits are guaranteed by Santander UK plc.
The Scottish Widows 3 year fixed term deposit account pays 1.50% AER/gross with a lower minimum of £10,000. Interest can be paid monthly, quarterly or annually, allowing you to choose the option that suits your charity finance requirements.
AER – Stands for the Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once each year. (As every advertisement for a savings product which quotes an interest rate will contain an AER, you will be able to compare more easily what return you can expect from your savings over time)
Latest fixed rate bond alternatives for charities
If you’ve considered fixed rates in the past for your charity savings, you may be interested in the latest structured deposit plans, which provide an alternative to traditional fixed rate bonds. This type of savings plan offers the potential for market-linked returns, while protecting your capital at the same time.
The Investec Kick Out Deposit Plan has a 6 year term, but offers the opportunity to mature early after years 3, 4 or 5. To achieve early maturity the average closing levels of the Index for the five business days up to and including one of the Kick-Out Dates must be higher than the Initial Index Level. If the Plan does mature early then it will return 4.75% times the number of years the Plan has been active (not compounded). For example, early maturity at the end of year 3 would return 14.25%. If the Plan runs for the full 6 year term and Final Index Level on the maturity date is higher than the Initial Index Level then you will receive a 28.5% return (6 x 4.75%) plus the return of your capital. If, at maturity, the Final Index Level is equal to or lower than the Initial Index Level, you will not receive a return but your initial capital will be repaid.
Structured deposit plans are capital protected. There is a risk that the company backing the plan or any company associated with the plan may be unable to repay your initial investment and any returns stated. In this event you may be entitled to compensation from the Financial Services Compensation Scheme (FSCS), depending on your individual circumstances. In addition, you may not get back the full amount of your initial investment if the plan is not held for the full term. The returns from structured deposits are not guaranteed. The past performance of the FTSE 100 Index and any companies listed on the FTSE 100 Index is not a guide to future performance.
No news, feature or comment should be seen as a personal recommendation to invest. If you are in any doubt as to the suitability of a particular investment you should seek independent financial advice.
* Data accurate as of 21/11/2014.