GE Direct launches 18-month fixed rate savings bond paying 2.9%
Savings rates on short-term accounts have been falling across the market, so should you be investing your cash for a longer period?
GE Capital Direct (GE) has launched a market-leading 18-month savings bond paying 2.9%.
In an environment of high inflation and a rock bottom base rate, a savings account paying a decent rate is hard to come by.
So that’s why this new deal from GE looks competitive, though it will only suit people who are able to lock their money away for the duration of the bond.
The deal
Anyone can open this account with GE, which is suitable for those saving over the medium term.
To open it, you’ll need to deposit at least £1,000 and you won’t be able to add or withdraw from this account for the 18-month term.
GE's bond is offering the top rate of interest on accounts of this length, though unfortunately that's not saying a lot - there aren't a great deal of other accounts to compare it with.
Next in line is an account from Metro Bank which pays 2.75% on an opening deposit of £500, joint with a Sharia-compliant account from Bank of London and the Middle East at the same rate but with a hefty £25,000 opening deposit.
After these two, rates drop significantly to the Barclays 2.35% account which you can open with £1.
One-year accounts
For those savers who need access to their cash sooner, but not instantly, a one-year bond is a better option. That’s because you’ll get a slightly higher rate of interest.
There are four accounts paying 3% at the moment from FirstSave, State Bank of India and Shawbrook Bank. These vary in the amount you need to deposit as can be seen in the table below.
The best one-year fixed rate bonds
|
Account |
Rate |
Opening deposit |
|
FirstSave: One Year Fixed Rate Bond Issue 22 |
3% |
£1,000 |
|
State Bank of India: Hi Return Fixed Deposit |
3% |
£1,000 |
|
Shawbrook Bank: One Year Fixed Rate Bond Issue Three |
3% |
£5,000 |
|
FirstSave Postal: One Year Fixed Rate Bond |
3% |
£25,000 |
|
ICICI Bank UK: Fixed Rate Account |
2.85% |
£1,000 |
Two-year fixed rate bonds
If you’re happy putting your money away for two years, the rates on offer are even more attractive.
There's State Bank of India for example offering a rate of 3.5% if you put away £1,000 followed by 3.03% from Islamic Bank of Britain and 3% from Tesco.
These pay quite a bit more and you only need to lock the cash away for six extra months compared to the GE bond to benefit.
The best two-year fixed rate bonds
|
Account |
Rate |
Opening deposit |
Access |
|
State Bank of India: Hi Return Fixed Deposit |
3.5% |
£1,000 |
Branch, post |
|
Islamic Bank of Britain: Sharia’s compliant Fixed Term Deposit |
3.03% |
£1,000 |
Online, phone, branch, post |
|
3% |
£2,000 |
Online, phone |
|
|
Shawbrook Bank: Two Year Fixed Rate Bond Issue Two |
3% |
|
Online (opening), phone, post |
|
Chorley & District: Two Year Tracker Bond Issue One |
3% |
£1,000 |
Branch, postal |
What are the other options?
In the first instance a cash ISA is generally the best option for savers as any interest you make is tax free, up to the limit of £5,640 for this year.
In the instant access market things are pretty dire at the moment. Rates have been plummeting for quite some time and it’s now tough to find a rate above 2.5%.
Right now the top account comes from the West Brom BS and pays a measly 2.52%. After that there are two accounts from Derbyshire Building Society, at 2.5% on a deposit of £1,000 and Nationwide Building Society at the same rate.
These accounts work if you need instant access to your money, without any withdrawal penalties, but the rates are not particularly tempting as you can see from our comparison tables. Read Is there any point opening an easy access savings account? for more.
More on savings:
The top telephone and branch-based savings accounts
The best instant-access savings accounts
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Comments
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These low interest rate have generated a fake economy, and some weird things are happening. The banks don't need our money as they can borrow in bulk cheap. Even something obscure like the MPs expenses scandal was/is based on property prices caused by low interest rates. We need interest rates back to normal. Wave bye bye to the value of your savings, and this government couldn't care a dam'n. Mind you, you can also wave bre bye to the value of assets as prices fall.
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save some money in Tesco Christmas saver and get 6%...yes a whopping 6%!! Ok the amount you can save is paltry but it could help for an expensive time of year!!!
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Aren't the falling rates due to the government making cheap loans available to the banks to try and encourage them to lend to small businesses? So now they don't need savers money anymore! Don't these politicians have any brains between them. Or maybe they aren't so daft as lower interest rates mean the country's debts are cheaper. Nevertheless it's less money in savers and particularly pensioners pockets who rely for their income on interest on their savings. So they have less disposable income which further damages the economy which means small businesses won't have business to support the loans. Meanwhile the banks continue to strengthen their balance sheets and continue to grab their fancy bonuses all at our expense. Where is the justice, is all business corrupt, banks, utility companies running cartels, foreign based companies avoiding UK corporation tax, all the main utilities are foreign so all this extra profit they are making is no doubt leaving these shores. We kid ourselves with renewable energy another cash generator for these companies and wealthy landowners. Again all this subsidy(well actually we subsidise it through our bills) is draining overseas, politicians jumping on every gravy train available, few have life experience having come out of uni with degrees in politics and couldn't run the preverbal p*ss up in a brewery! Just how long are we going to put up with this lunacy?
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20 November 2012