This year's version of the Poppy bond offers a great rate.
It’s that time of the year when almost everyone you see on the street is wearing the same thing: a bright red poppy.
Contributing to the Royal Legion’s Poppy Appeal is something many of us do without thinking, an important way of honouring the service our Armed Forces provide (and it’s not a ‘political statement’, no matter what FIFA may think).
But there’s another way of donating, and you’ll get more than just a flimsy plastic poppy in return. You’ll also earn a decent rate of interest on your savings!
The Coventry BS Poppy Bond
For the fourth straight year, Coventry Building Society has launched a Poppy savings bond to coincide with Remembrance Day. This year’s incarnation pays a fixed rate of 3.55% AER until 30th April 2013, while the mutual will make a donation worth 0.05% of the total funds invested in the bond to the Poppy appeal.
[SPOTLIGHT]The account can be opened with as little as £1, while you can also decide whether you want to receive your interest on a monthly or annual basis.
However, it’s worth noting that you will not be allowed any withdrawals before the bond matures, or to close the bond early. As a result, it’s only really appropriate for money you are unlikely to need for the next year and a half.
So, how does it compare to the rest of the market?
The best buy bonds
Here are the top rates you can get from bonds at the moment over one-year, 18-month and two-year terms:
|
Bond |
Term |
AER |
Minimum investment |
|
Two years |
3.90% |
£500 |
|
|
Two years |
3.85% |
£500 |
|
|
30.4.13 |
3.55% |
£1 |
|
|
31.3.13 |
3.50% |
£1,000 |
|
|
One year |
3.60% |
£2,000 |
|
|
One year |
3.55% |
£100 |
As you can see, the bond from Coventry is extremely competitive. If you want to save for less than two years, only the Clydesdale account offers a marginally higher rate, and even then you’ll need to have a far more substantial stack of cash ready to set aside.
However, as is always the case, you can get a superior rate if you’re happy to lock your money up for longer. That said, in the current climate, I would be somewhat wary of locking my money up for too long, as interest rates will have to start moving upwards sooner rather than later.
If you do want to get your hands on the Poppy bond, I’d suggest you move quickly, as it won’t be around for long!
Keeping your money within reach
With money tight for all of us at the moment, it can be very tempting to keep your money within easy reach by placing it in a short-term bond or easy access savings account.
Inevitably, there is a price to pay, in that the interest you earn will be reduced once again. Here are the current best offers in the easy access market:
|
Account |
Interest rate (AER) |
Minimum deposit |
|
Nationwide MySave Online Plus (one free withdrawal) |
3.12% (includes a 12 month 1.58% bonus) |
£1,000 |
|
3.10% (includes a 12 month 2.60% bonus) |
£1 |
|
|
3.01% (includes a 12 month 1.36% bonus) |
£1 |
|
|
3.00% (rate fixed for 12 months) |
£1 |
|
|
2.85% (rate guaranteed to be at least 1.80% above base rate until March 2013) |
£1,000 |
As you can see, not only are the fates markedly lower than you’ll get from bonds, but the rates on offer will drop even further after twelve months, meaning you’ll probably have to find a new home for your money at that point.
For more on such accounts, check out The best new short-term savings deals.
More: Compare savings accounts | The terrible mistake 40% of homeowners are making | Don’t be bullied by your insurance company