Account offers savers 2.35% AER but you need to apply quickly.
Aldermore is cutting the rate on its two-year fixed rate savings bond after only a week.
It's currently paying a market-leading 2.35% AER but the rate will be cut to 2% from 4pm on Thursday 14th.
It offers the option of monthly or annual interest and can be opened with a deposit of £1,000.
The maxiumum you can save with the account is £1 million and there are no early withdrawals allowed.
How it compares
You can see how it compares to other two-year fixed rate savings deals below.
|
Account |
Interest rate (AER) |
Minimum deposit |
Access |
|
Castle Trust Two-Year Fortress Bond* |
2.75% |
£1,000 |
Online |
|
2.35% |
£1,000 |
Online, phone, post |
|
|
Kent Reliance Two-Year Fixed Rate Bond (Issue 25) |
2.30% |
£1,000 |
Online, branch |
|
Islamic Bank of Britain Two-Year Fixed Term Deposit** |
2.30% |
£1,000 |
Online, branch, post |
|
FirstSave Two-Year Fixed Rate Bond |
2.30% |
£1,000 |
Online |
|
Investec Two Year Fixed Term Deposit |
2.30% |
£25,000 |
Online, phone |
| Bank of London and the Middle East Sharia’a-compliant Premier Deposit Account* | 2.25% | £25,000 | Online |
|
GE Capital Direct Two-Year Bond |
2.15% |
£1,000 |
Online |
|
2.10% |
£1,000 |
Online |
|
|
Shawbrook Bank Two-Year Fixed Rate Bond (Issue 21) |
2.05% |
£5,000 |
Post, online |
*Lower level of FSCS protection (£50,000)
**Anticipated profit rate
As you can see, the Castle Trust Two-Year Fortress Bond pays the top return over two years at the moment.
However, the deal is technically classed as an investment, so you will get a lower level of protection from the Financial Services Compensation Scheme; £50,000 instead of the regular £85,000.
So if you’d rather go for a traditional savings account and get the full protection Aldermore now offers the best rate around.
You can keep on top of the best deals in our article The best fixed rate savings accounts.
Short-term vs long-term fixed rate bonds
You tend to get a better return on your savings the longer you’re prepared to lock them away.
At the moment five-, seven- and ten-year bonds offer the most attractive returns of between 3% and 4%.
But these accounts are a gamble as you may find yourself trapped on an uncompetitive deal a couple of years in, when rates on saving accounts start to rise.
And this looks like a more likely scenario given that there have been strong indications the Base Rate will start to creep up from next year. Once this happens, saving rates are likely to follow.
Read more in What next for inflation and interest rates.
So short-term fixed rate bonds lasting up to two years could hold the key to earning a decent rate, without trapping your savings for too long.