Leeds Building Society’s new one-year fixed rate bond pays 6.85% AER.
While there are a few higher paying bonds on the market today, this particular deal is attractive in that it allows you to make one withdrawal worth up to 25% of your original investment without incurring any penalty charges (most other fixed rate accounts will dock you some or all of your interest for doing so).
The bond will no doubt prove popular with people looking to earn a high rate of interest but still want access to their money in case of an emergency.
The ins and outs
Leeds Building Society says there is also monthly interest option paying 6.80% AER (6.60% gross) for customers who require an income.
The bond, which is available by post or online, has a maximum investment of £1 million for single applicants, and £2 million for joint accounts.
The only real downside is the fact that it requires a fairly hefty £5,000 minimum investment, so it’s not for everyone.
Fix for a better deal
It has been well publicised that the main beneficiary of the credit crunch has been savers, with banks offering record interest rates in the hopes of attracting some much-needed cash.
Once you have used your full ISA allowance, fixed rate bonds are one of the best ways of securing a decent rate of interest on your hard-earned savings.
And with the base rate more likely to go down than up, you get the added security of knowing that your rate of return won’t fall for the duration of your investment, unlike instant access accounts.
Certain you won’t need to access your funds?
Due to rising inflation, basic rate taxpayers will need to earn an interest rate of at least 5.75% (on an taxed account) just to stand still, so this should be the bare minimum rate you should accept.
As we mentioned at the start, there are a handful of fixed rate products on the market today that offer a better rate than the Leeds one year bond. FirstSave currently leads the pack, paying 7.1% on its one year bond, while Icesave offers a slightly lower 7.06% on its one, two and three year deals.
Of course, all these accounts penalise you for accessing your funds. If you are not 100% certain that you won’t need to make a withdrawal, opt for an instant access account, such as the Kaupthing Edge High Interest Savings Account (6.55%).
Leeds Building Society Fixed Rate Bond: Key facts
• Annual interest: 6.85% gross p.a./ AER fixed, up to and including 31 August 2009
• Annual interest is paid at maturity on 31 August 2008
• Monthly interest: 6.60% gross / 6.80% AER, up to and including 31 August 2009
• Monthly interest is paid on last working day of every month
• Minimum investment £5,000
• Maximum investment £1 million (£2 million joint accounts)
• One withdrawal of up to 25% of initial capital invested allowed, without notice or penalty at any time
• Additional investments can be made to the account whilst the issue remains open |
