National Counties Building Society launches tracker savings bond

Savers offered chance to benefit from future Base Rate rises with new tracker bond. But is it a good idea?

National Counties Building Society has launched a variable two-year tracker savings bond, which currently offers an interest rate of 2%.

The bond pays the Bank of England Base Rate plus 1.50% for the term. Any rate changes will take effect on the first day of the following month.

You can invest a minimum of £5,000 and no additional investments or withdrawals are allowed before your term is up. When the two-year term has ended, your money will automatically be reinvested in another fixed rate bond.

Who else offers tracker bonds?

National Counties isn't the only place to put your money in a bond with a rate that will increase when Base Rate does. Here are a few of the other accounts on offer:

Account	Term	Interest rate (AER)	Minimum deposit	Account access
Halifax Online Tracker/Tracker Bond	18 months	1.93% (tracks 1.43% above Base Rate)	£500	Online, phone, in-branch
Saffron Building Society One Year Tracker Bond*	One year	1.50% (tracks 1.00% above Base Rate)	£5,000	In-branch, post
Kent Reliance BS Tracker Bond	Two years	1.50% (tracks 0.5% above Base Rate)	£1,000	Online, in-branch, post
Bank of Scotland Tracker Bond	18 months	1.00% (tracks 0.5% above Base Rate)	£2,000	Online, phone, in-branch
Lloyds 18 Month Tracker Bond	18 months	0.90% (tracks 0.40% above Base Rate)	£2,000	In-branch, phone

*Available to existing customers only

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Pros and cons of tracker bonds

Like tracker rate mortgages, tracker bonds move with a particular index or rate (such as the Bank of England Base Rate) for a set period of time.

So if Base Rate does increase around the turn of the year, as the governor of the Bank of England has hinted, then the rate of return you get will go up too. However, as you can see from the tables above, the rates on offer from tracker bonds generally are pretty measly, even if Base Rate does increase in the next few months.

The best fixed rate savings accounts

Savers can get a better return by locking their cash up in a fixed rate savings bond. Have a look at the best two-year deals available right now:

Account	Interest rate (AER)	Minimum deposit	Account access
RCI Bank Two Year Fixed Term	2.35%	£1,000	Online
Aldermore Two Year Fixed Rate Account	2.35%	£1,000	Online, post, phone
Kent Reliance Two Year Fixed Rate Bond	2.35%	£1,000	Online, in-branch, post
Al Rayan Bank Fixed Term Deposit	2.32%	£1,000	Online, in-branch, post, phone
Shawbrook Bank Two Year Fixed Rate Bond	2.30%	£1,000	Online, post

Find even more savings accounts with loveMONEY

To see how the rates compare on bonds of different terms, check out The best fixed rate saving accounts.

That said, you can still do better with a current account. The Nationwide FlexDirect Account gives you 5% interest on balances up to £2,500 for the first 12 months, but this will fall to 1% after the introductory period which isn’t nearly as attractive.

If you’re not as enticed by teaser rates, the TSB Classic Plus Account gives you 5% returns on balances up to £2,000. It also now pays cashback. For more, read TSB adds 5% cashback to market-leading current account.

Take a look at more high interest current accounts

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