If you want to get a cracking savings deal, it pays to act quickly!
Sainsbury’s launched some cracking fixed rate savings bonds on Monday. They included a five-year bond which paid 4% a year – an excellent return when rates are so low.
However, there was just one problem. Sainsbury’s withdrew this bond 24 hours after launch. The supermarket bank withdrew four other fixed rate bonds at the same time.
Sainsbury’s says the problem was that some high-paying rival products were withdrawn on Monday and Sainsbury’s was hit by a deluge of applications. Sainsbury’s then withdrew the bonds on Tuesday.
Never before
Now I’ve seen savings accounts being withdrawn a week or two after launch, but I don’t remember seeing a withdrawal happen the day after launch. It’s astonishingly fast.
It’s also very annoying as I’m sure the Sainsbury’s products would have appealed to many lovemoney.com readers.
I guess the moral of the story is that if you see an attractive account, don’t hang around if you want to apply for it. It may be gone 24 hours later!
Best accounts now
Still, there’s no use crying over spilt milk, so let’s look at the best fixed rate bonds on the market right now.
I’ll start with fixed rate bonds for three and five years.
Top savings bonds for three, four and five years
|
Account |
Interest rate AER |
Duration |
Minimum investments |
Notes |
|
4.6% |
Five years |
£25,000 |
‘Profit’ rather than interest to comply with Sharia |
|
|
State Bank of India Hi Return Fixed Deposit |
4.5% |
Five years |
£1,000 |
|
|
Julian Hodge Bank Capital Millennium Bond |
4% |
Five years |
£1,000 |
|
|
Sainsbury’s five year Fixed Rate Bond |
4% |
Five years |
£5,000 |
Account withdrawn |
|
3.91% |
Five years |
£1,000 |
|
|
|
4% |
Three years |
£25,000 |
‘Profit’ rather than interest to comply with Sharia |
|
|
State Bank of India Hi Return Fixed Deposit |
3.85% |
Three years |
£1,000 |
|
|
Shawbrook Bank Fixed Rate Bond Issue 1 |
3.8% |
Until Oct 6th 2014 |
£5,000 |
|
|
Kent Reliance Three Year Fixed Rate Bond Issue 5 |
3.75% |
Three years |
£1,000 |
|
|
Sainsbury’s Three year Fixed Rate Bond |
3.75% |
Three years |
£500 |
Account withdrawn |
|
3.7% |
Three years |
£2,000 |
|
|
|
Bank of Cyprus UK Fixed Rate Bond |
3.7% |
Three years |
£1,000 |
|
You’ll see that I’ve put two of the withdrawn Sainsbury’s bonds in this table. That’s because I want to show that, in spite of the flood of applications, neither bond was the absolute best.
Over five years, you could get an annual rate of 4.6% from the BLME 5-year Premier Deposit Account while State Bank of India will pay you 4.2% a year. The rates on both accounts are well ahead of Sainsbury’s withdrawn five-year bond that offered 4% a year.
That said, there’s a big potential problem with the BLME account – you need a £25,000 minimum deposit. The minimum deposit for the second-place account, the State Bank of India Hi Return Fixed Deposit, is much lower at £1,000, so that’s probably a more attractive replacement for the Sainsbury’s account.
Moving onto three-year accounts, you’ll see that once again BLME and State Bank of India take the first two places. Indeed the withdrawn Sainsbury’s account paid 0.25% less than the table-topping account from BLME.
However, I think I know why so many savers went for the Sainsbury’s account even though it didn’t pay the highest rate – for both three and five years. With Sainsbury’s you could get a highly competitive rate from a well-known and trusted brand in the UK. When you’re looking for a safe home for your savings, brand is a crucial factor for many folk.
So if you want a well-known brand, you may want to go for the Tesco Bank Fixed Rate Saver account which pays 3.7% a year and has a minimum deposit of £2000.
Top savings bonds for one and two years
|
Account |
Interest rate AER |
Duration |
Minimum investments |
Notes |
|
3.75% |
Two years |
£25,000 |
‘Profit’ rather than interest to comply with Sharia |
|
|
Islamic Bank of Britain Sharia compliant fixed term deposit |
3.75% Anticipated profit rate |
Two years |
£1,000 |
‘Profit’ rather than interest to comply with Sharia |
|
3.6% |
Two years |
£2,000 |
|
|
|
Vanquis Bank High Yield two year Fixed Rate Bond |
3.51% |
Two years |
£1,000 |
|
|
Post Office Growth Bond Issue 1 |
3.51% |
Two years |
£500 |
|
|
Kent Reliance Two Year Fixed Rate Bond Issue 6 |
3.51% |
Two years |
£1,000 |
|
|
3.5% |
Two years |
£2,000 |
|
|
|
Sainsbury’s Two year Fixed Rate Bond |
3.5% |
2 years |
£5,000 |
Account withdrawn |
|
Cahoot One year Fixed Rate Bond |
3.6% |
Until Nov 1st 2013 |
£25,000 |
|
|
Santander Super Bond Issue 47 |
3.51% |
Until Oct 1st 2013 |
£500 |
|
|
3.5% |
18 months |
£25,000 |
‘Profit’ rather than interest to comply with Sharia |
|
|
FirstSave One Year Fixed rate bond 21 |
3.45% |
One year |
£1,000 |
|
|
3.35% |
One year |
£25,000 |
‘Profit’ rather than interest to comply with Sharia |
|
|
Aldermore One year fixed rate account |
3.35% |
One year |
£1,000 |
|
|
Sainsbury’s One-year Fixed Rate Bond |
3.26% |
One year |
£5,000 |
Account withdrawn |
Once again the top rates come from fairly obscure banks. If you want to get the best rate from a high-street name, Tesco offers the best deal with its two year Fixed Rate Saver that pays 3.6% a year. That’s actually a higher rate than on Sainsbury’s withdrawn two-year account, so my hunch is that Sainsbury’s didn’t get quite as many applications for that withdrawn bond.
It’s a shame that Sainsbury’s withdrew its fixed rate bonds so quickly this week. But at least there are some other decent products on the market. If you fancy any of them, I suggest you apply quickly. Just in case there’s another withdrawal….
More from lovemoney.com
Savers could win £1 million with Halifax
Treasury orders bank to offer simple savings accounts
Auto enrolment: how NEST will invest your compulsory pension