Find a decent rate with a bond hero
In the savings market it's all about tryng to find the best rate for your money. But what type of products offer the best rate?
If homeowners on tracker mortgages have had reason to smile since the Bank of England’s decision to cut the base rate of interest to 0.5 per cent, then savers can be forgiven for looking a bit glum. Accounts that may have looked good just six months or so ago, guaranteed to equal base rate for instance, now offer paltry rates at a time when, more than ever, every penny counts.
In terms of interest, many accounts out there offer only slightly more interest than could be accrued if earnings were stuffed into a mattress or buried in the garden. In fact, recent research found that almost half of current accounts on the market pay no interest at all. However, there are still accounts out there that there which offer a decent rate of interest, with Abbey and Alliance & Leicester both offering products which pay six per cent. Switching your account is less hassle than you might think, too.
Surprisingly, additional research has found that easy access accounts have taken over their notice counterparts when it comes to the highest rate of interest. Notice accounts have long had the upper hand on rates as providers are warned before any withdrawals are made.
But with lenders have turned to their savings books to fund their lending, the tide has turned, with no notice accounts now offering up to 3.30 per cent interest on a minimum deposit of £1,000. Admittedly, many will not be able to stretch to such lengths, but Egg’s Savings Account pays 3.25 per cent on balances starting from just £1.
Another viable option, if you can afford to put a sizable chunk of cash away for a set period of time, is a fixed rate bond. The rates of interest on these products have risen across the board since March, with the number offering four per cent or more increasing from a meagre three to over 100.
One of the secrets behind their enduring popularity is their relative simplicity. Savers put their money away for a certain amount of time, be it one, three or five years, and are given it back with added interest when the term is finished.
It is a stable investment, especially compared to sinking money into stocks and shares, where the rates of return may be higher but you may well make a loss. Investors looking for decent savings interest rates, but who don’t want to tie their money up for years, could do worse than consider short term fixed rate bonds, which currently offer an average rate of 3.15 per cen
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