We take a look at how Santander's new in-betweener fixed rate savings bond compares.
Santander has launched a trio of fixed rate bonds spanning one-year, 15-month and two-year periods.
The one-year deal pays 1.4% while the two-year offer pays 1.7% - both are available to new customers with a minimum deposit of £500.
But the most appealing rate on offer from the new batch is the 15-month bond, which pays 2% AER.
It sits in-between the two other deals but offers a much better rate.
The catch is that as well as a £500 deposit you will need to be either a 123 Current Account or a 123 Credit Card holder to apply.
In-betweener bonds
Oddly it’s not the rate that’s interesting about the new leading Santander bond, but its awkward shape.
[SPOTLIGHT]The term lasts longer than a year, but the 15-month period doesn’t seem so bad because it lasts less than a two-year stretch.
There is something quite appealing about a bond that is somewhere in-between commitments – it makes the jail sentence for your money sound less extreme.
Just like most other fixed rate bonds, the Santander 15-Month deal only allows one deposit and no access until maturity.
Although rates are low now due to the rock bottom base rate and the effects of the Funding for Lending Scheme, they will rise again. So savers might not want to lock into a rate for too long. In-betweener fixed rate bonds feel like the perfect compromise.
Best in-betweener bonds
If you like the sound of an in-betweener fixed rate bond, then here are the best that last longer than 12 months but less than two years.
For a comprehensive round-up of the best fixed rate bonds across all terms check out: The top fixed rate savings bonds.
|
Account |
Term |
Rate (AER) |
Min deposit |
Restrictions |
|
Loughborough Building Society 18-Month Fixed Rate bond |
18 months |
3% |
£1,000 |
Must live in postcodes LE, NG or DE to open an account. |
|
Bank of Cyprus UK Fixed Rate Bond |
18 months |
2.20% |
£1,000 |
Loyalty rate only available to existing customers. |
|
Bank of Cyprus UK Fixed Rate Bond |
15 months |
2.15% |
£1,000 |
Loyalty rate only available to existing customers. |
|
Islamic Bank of Britain Sharia Compliant Fixed-Rate Deposit * |
18 months |
2% |
£1,000 |
N/A |
|
Santander 15-Month Fixed Rate Bond |
15 months |
2% |
£500 |
Must be either a 123 Current Account or a 123 Credit Card customer to apply. |
|
Metro Bank Fixed-Term Savings |
18 months |
2% |
£500 |
Must have another Metro Bank account for interest to be paid into. |
|
Bank of London and the Middle East Sharia-Compliant Premier Deposit Account* |
18 months |
2% |
£25,000 |
N/A |
|
Dunfermline Fixed Rate Bond |
Until 31/08/14 |
1.75% |
£100 |
N/A |
|
Bank of Ireland Limited Edition Fixed Term Deposit Issue 53 |
18 months |
1.50% |
£2,000 |
N/A |
* Anticipated profit rate
Santander’s 15-month deal isn’t a market leader when it comes to in-betweener bonds and like a lot of the others come with opening restrictions.
If you’re lucky enough to have £200,000 to invest you can get access to a 0.05% higher rate on the Santander deal. But since the Financial Services Compensation Scheme (FSCS) only guarantees £85,000 worth of deposits per person, per institution, putting all your eggs in one basket for just a 0.05% boost isn’t the best idea.
The Islamic Bank of Britain Sharia Compliant Fixed-Rate Deposit offers the best return on an in-betweener bond without the restrictions. It comes with a 2% rate for a £1,000 minimum investment.
Commitment shy
In-betweener bonds are good for the commitment shy, but you should double check that there aren’t better deals either side that pay more!
When looking at the best one-year fixed rate bonds available today a rate of 2% for a deposit of at least £1,000 is on offer from the Bank of Cyprus and also at Julian Hodge Bank. Many of the top in-betweener bonds can match or beat that. But it’s up to you which term you are happier with; 12 or 15 months.
At the other end of the scale the two-year fixed rate bonds shape up a bit better with the top account from the Islamic Bank of Britain paying 2.30% for a minimum £1,000 deposit. The Loughborough Building Society's 18-Month Fixed Rate Bond is the only in-betweener deal that beats it with a rate of 3%, but the account is restricted by postcode so not everyone can take advantage.
Elsewhere if you are willing to lock your money up for even longer the top three-year deal can get you a rate of 2.5% at the State Bank of India, the best four-year stretch will bag you a 2.55% rate at Shawbrook and the market-leading five-year fixed rate bond will get you a rate of just 3% with Virgin Money.
Personally I don't like the sound of locking into such low rates for so long.
More on saving:
The top fixed rate savings bonds
The best notice savings accounts
The best regular savings accounts