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Bank Accounts Latest News 'Revolutionary' savings bond to offer interest up-front
Bank Accounts Latest News 'Revolutionary' savings bond to offer interest up-front 'Revolutionary' savings bond to offer interest up-front
Santander aims to 'turn the market on its head' by launching a 'revolutionary' Upfront Interest Bond.
The three year bond with a compound rate of 3.4% pays three years interest in advance, the first of its kind in the UK, the bank claims.
At 3.36% gross AER, the minimum £10,000 required to open the bond receives over £800 net interest within weeks of opening, a useful bonus for customers leading up to Christmas.
Santander's head of savings, Matt Hall, stated that anybody opening a bond by 20th November should be paid by the start of December.
"We have approached our new savings bond from a completely fresh angle", he added. "It is the first savings bond which pays interest upfront, instead of monthly or annual instalments. It is designed to give customers more control over their money at a time when we know they really need it."
"Obviously customers will be able to spend their upfront interest on whatever they like, maybe a holiday, Christmas shopping or even reinvest it to put it to work immediately."
Interest has to be paid into a Santander current account, the conditions state, and the original amount invested cannot be withdrawn until the bond has matured in December 2014.
Consumers may be intrigued by this innovative twist on savings returns at a time when levels of disposable income are relatively low, but that does not disguise the fact that the product is not the most competitive on the market in terms of interest. 12- and 18-month bonds recently released by the Yorkshire group are offering 3.4-3.5% gross interest per annum.
The advantage of Santander's product is that the early interest can be reinvested almost immediately, which allows it to deliver again with a little more effort on the saver's part.
Will you be tempted by the extra sum for extra saving or Christmas spending? Or, are the shorter term products still more efficient? Check out Which4U's savings accounts tables to check how Santander's 'revolutionary' bond compares.
By Kate Guthrie
Thursday, 03 November 2011 10:56
Comments (3)
The comments listed below are opinions held by the individuals posting and are not endorsed by, or representative of opinions held by which4u.co.uk. We cannot be held responsible or liable for the accuracy or content of any comments submitted. We reserve the right to publish, remove or edit comments as we see fit.
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Keith [Editor] 2011-11-08 12:09:28A comment recently left by a representative of 'Money to the Masses' - unfortunately swallowed in the transfer to our new site - reputed the accuracy of these figures.
Please note: the interest comments here represent the minimum £10,000 opening amount for the bond and not the £12,000 sum which features on advertising material for this product.
The article also makes it clear that this is not the most competitive product on the market in terms of interest.
Customers are to weigh up the benefits of an advance (which can be reinvested again) with the concession of a lower rate than is available elsewhere on traditional bonds. On that basis, whether it's quite so revolutionary is difficult to say.
But while opinions on the merits product merits are bound to differ, we are happy that there are no factual inaccuracies in this piece. -
Jim C 2011-11-14 15:55:02An observation.
As advised by Santander the tax liability becomes due when the upfront interest payment is made. This results in a benifit if the bond is taken out in a year when you are in a lower tax bracket and are likely to be in a higher bracket in future years.
However, having had problems with Santader in the past, I will be waiting to see which of their competitors jumps on this bandwagon.
J -
Keith [Editor] 2011-11-15 10:46:08Many thanks for reading, Jim, and for your comment. It's an excellent point you make about tax affecting the interest sum to be received.
This product intrigued me enough to feature it further on our Finance Blog:
http://blog.which4u.co.uk/money-saving-tips/santander-revolutionary-bond
Even at the standard tax rate, the interest this offers is not the most competitive over 3 years. But it is a different model, and the advance may well be a feasible draw.
You certainly aren't the first to express doubts about Santander. But this product-type will prove more 'revolutionary' if, like you say, competitors see this as a new way forward for medium-term deals.
Top 5 Savings Accounts
|
Provider |
Notice |
Interest Paid |
Min Bal |
Apply |
|
|---|---|---|---|---|---|
| View Full Table > | |||||
 |
|||||
|
3.01%
|
Instant
|
Monthly
|
£1
|
||
 |
|||||
|
3.10%
|
Instant
|
Monthly
|
£1
|
||
 |
|||||
|
2.50%
|
Instant
|
Monthly
|
£1
|
||
 |
|||||
|
2.50%
|
Instant
|
Annually
|
£10,000
|
||
 |
|||||
|
2.50%
|
Instant
|
Monthly
|
£1,000
|
||
Post Office Online Saver
- Access your savings 24/7/365
- Apply online in less than 10 minutes
- Instant account opening
- Open a savings account with just £1
- Rate applies to annual interest option and includes 1.36% gross/AER fixed interest bonus for the first 12 months
- Monthly interest option also available
- YOUR SAVINGS ARE PROTECTED UP TO £85,000 PER PERSON BY THE FSCS - Financial Services Compensation Scheme
ING Direct Savings Account
- New customers can enjoy a variable rate of 3.10% AER (3.06% gross p.a.) including a 2.56% gross p.a. bonus fixed for 12 months from the business day following account opening.
- After 12 months the rate will revert to our ING Direct Savings Account variable rate, currently 0.50% AER
- Move your money when you like, with no penalties or restrictions
- Start saving from £1, with no minimum or maximum monthly deposits required
- Open an account in minutes
- Award winning UK call centres
Barnsley Building Society Online Saver
- Great on-going rate of 2.50% gross pa/AER† variable with NO bonus period!
- Apply online with Barnsley Building Society award-winning, paperless application. No forms to sign.
- Open an Online Saver with as little as £1
- Make withdrawals at any time as long as you leave a minimum balance of £1
- Check your balance and view your statements whenever you wish
- Log into our secure website to transfer money to your nominated bank or building society account or a nominated account held with us
- Rate includes a bonus of 0.50% until 31/12/2010.
- YOUR SAVINGS ARE PROTECTED UP TO £85,000 PER PERSON BY THE FSCS - Financial Services Compensation Scheme
Lloyds TSB eSavings Account
- You must be an existing Lloyds TSB customer AND signed up to Lloyds Online Banking to be able to apply for this product
- Earn 1.60% AER/Gross from £1, and up to 2.50% AER/Gross on balances of £10,000 or more View eSavings Account interest rates.
- These rates include an introductory bonus of 1.50% AER on all tiers for the first 12 months.
- Interest paid annually.
- Start saving with only £1.
- Instant access - the convenience of Internet Banking or PhoneBanking means you can access your savings when it suits you.
- Set up a standing order - saving regularly from your current account is the easy way to grow your savings.
- Name your account to suit you, such as holiday, rainy day or simply savings.
- YOUR SAVINGS ARE PROTECTED UP TO £85,000 PER PERSON BY THE FSCS - Financial Services Compensation Scheme
Nationwide Regular Savings
- A competitive rate of interest of up to 2.50% AER, (2.50% gross p.a.)
- Flexibility to make unlimited withdrawals if you need to giving you the highest level of flexibility available.
- Open an account with as little as £1!
- Save up to £1000 each month.
- Open and manage your account online using the Nationwide MySave Online Savings site.
- YOUR SAVINGS ARE PROTECTED UP TO £85,000 PER PERSON BY THE FSCS - Financial Services Compensation Scheme
Lloyds TSB Easy Saver
- A variable rate of interest, currently 1.60% AER/Gross.
- This rate includes a fixed introductory bonus of 1.50% AER for the first 12 months.
- Open from as little as £1.
- Interest paid annually.
- Instant access - the convenience of Internet Banking or PhoneBank® means you can access your savings when it suits you.
- No limits on how much you can save.
- The options to have a standing order payment into your account, so you know your savings are always growing.
- Optional Cashpoint® card for easy access on the move.
- YOUR SAVINGS ARE PROTECTED UP TO £85,000 PER PERSON BY THE FSCS - Financial Services Compensation Scheme
Scottish Widows Direct Transfer Account
- Rate includes a bonus of 0.89% for 12 months
- Minimum balance £1000
- Deposits can be made by internet banking, telephone or post
- No notice period or penalties for withdrawals
- YOUR SAVINGS ARE PROTECTED UP TO £85,000 PER PERSON BY THE FSCS - Financial Services Compensation Scheme
Cheshire Building Society Direct Cash ISA
- Deposit £1000+ and get 3.35% AER (variable) tax-free including a fixed 2.35% AER bonus interest rate, paid until 30th November 2013
- Deposit £1-£999 and get 0.25% AER only.
- Easy access to your cash, with unlimited withdrawals and deposits up to your annual cash ISA allowance (transfers from existing ISAs are not permitted)
- However, you will need to open your account online today with at least £1,000.
- You will receive a welcome letter with everything you need to manage your account by post.
Lloyds TSB Cash ISA Saver
- Earn a variable rate of 2.65% AER/tax-free.
- This rate includes a fixed introductory bonus of 1.65% AER for the first 18 months from account opening.
- Interest paid annually on the 31st March.
- Save up to £5,640 per tax year.
- Make withdrawals from as little as £1.
- Set up regular payments into your ISA from your current account.
- Manage your Cash ISA Saver through Internet Banking if you're registered.
- You can transfer your existing ISA into us, with our ISA transfer form.
- YOUR SAVINGS ARE PROTECTED UP TO £85,000 PER PERSON BY THE FSCS - Financial Services Compensation Scheme
Aldermore Easy Access Saver
- Transparent - our competitive rates are not artificially inflated by bonuses or introductory offers
- Reassurance - our interest rate is guaranteed to be at least 1.70% above Base Rate until 1 March 2013
- Fast and easy setup - open an account, complete identity checks and move your money in minutes
- Accessible - open an account with just £1,000
- Flexible - add to your savings whenever you like
- Unlimited withdrawals - access your money whenever you need it, without restriction or loss of interest
- Easy to manage - do it online, by phone or by post
- YOUR SAVINGS ARE PROTECTED UP TO £85,000 PER PERSON BY THE FSCS - Financial Services Compensation Scheme
Chelsea BS Fixed Rate ISA
- Guaranteed fixed rate of interest for the duration of the Fixed Rate e-ISA
- Minimum investment of £100
- ISA transfers in*** from other providers and deposits up to your 2011/2012 ISA limit, can be made whilst the product remains on sale. Transfer charges may apply, please check with your existing provider
- Interest paid annually
- Withdrawals are not permitted during the term
- Early closure or transfer out to another ISA provider is permitted subject to 90 days loss of interest on the closing balance. Early closure would mean loss of tax free status other than transfers to another ISA provider.
- YOUR SAVINGS ARE PROTECTED UP TO £85,000 PER PERSON BY THE FSCS - Financial Services Compensation Scheme
Top 5 Fixed Rate Bonds
|
Provider |
AER |
Duration |
Min Bal |
Apply |
|---|---|---|---|---|
| View Full Table > | ||||
 |
||||
|
4.10%
|
Fixed term for 5 years
|
£10,000
|
||
|
|
||||
|
3.40%
|
Fixed term for 1 year
|
£10,000
|
||
 |
||||
|
3.27%
|
Fixed term for 1 year
|
£500
|
||
|
|
||||
|
2.45%
|
Fixed term for 1 year
|
£1
|
||
|
|
||||
|
2.70%
|
Fixed term for 1 year
|
£50,000
|
||
Scottish Widows 5 Year Fixed Rate Bond
- The Scottish Widows 5 Year Fixed Rate Bond is a fixed interest rate account offering a competitive 4.10%AER over a period of five years. The account is available to new and existing Scottish Widows Bank customers and is not linked to any investment products.
- Minimum deposit £10,000
- Deposit Term - 5 years
- Fixed 4.10% annual gross
- No partial withdrawals permitted during deposit term.
- *Stands for the Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once each year.
- YOUR SAVINGS ARE PROTECTED UP TO £85,000 PER PERSON BY THE FSCS - Financial Services Compensation Scheme
Lloyds TSB International 1 Year Bond
- Save for 1 year
- Fixed interest rates of 3.40% AER/Gross*.
- Save from £10,000 up to £5,000,000
- No withdrawals are allowed.
- Rate is fixed for the term of the deposit.
- YOUR SAVINGS ARE PROTECTED UP TO £85,000 PER PERSON BY THE FSCS - Financial Services Compensation Scheme
Post Office 1 Year Fixed Term Bond
- Great fixed rate for 1 year fixed term
- Annual Interest Option = 3.27% gross/AER fixed
- Monthly Interest Option = 3.22% gross/3.27% AER
- Deposit from £500 to £2 million
- Quick and easy online application with instant account opening
- Monthly interest option also available
- No extra deposits or withdrawals after opening
- Close your Bond early if necessary (breakage fee applies)
Nationwide 1 Year Fixed Rate Bond
- Get higher savings rate the more you deposit
- £1 - £9,999 = 2.45%
- £10,000 - £24,999 = 2.50%
- £25,000 - £49,999 = 2.60%
- £50,000+ = 2.70%
- You need to have a Nationwide Flexi-Current Account to deposit funds in to this bond. If you do not have one you will be asked to set one up as part of your application process.
- Manage your savings bonds online via our secure Internet Bank
- Enjoy the security of a guaranteed rate of return
- Choose between monthly or annual interest
- Open several e-Bonds (the combined savings bonds balance mustn't exceed £3m)
- Use your own e-Bond account nickname instead of having to remember a lot of numbers
- Your online security protected with Nationwide's Internet Banking Promise
- YOUR SAVINGS ARE PROTECTED UP TO £85,000 PER PERSON BY THE FSCS - Financial Services Compensation Scheme
Nationwide 1 Year Fixed Rate Bond
- Get higher savings rate the more you deposit
- Deposit £50,000+ = 2.70% AER fixed for 1 year
- You need to have a Nationwide Flexi-Current Account to deposit funds in to this bond. If you do not have one you will be asked to set one up as part of your application process.
- Manage your savings bonds online via our secure Internet Bank
- Enjoy the security of a guaranteed rate of return
- Choose between monthly or annual interest
- Open several e-Bonds (the combined savings bonds balance must not exceed £3m)
- Use your own e-Bond account nickname instead of having to remember a lot of numbers
- Your online security protected with Nationwide's Internet Banking Promise
- YOUR SAVINGS ARE PROTECTED UP TO £85,000 PER PERSON BY THE FSCS - Financial Services Compensation Scheme
Post Office 3 Year Fixed Term Bond
- Great fixed rate for 3 year fixed term
- Annual Interest Option = 3.72% gross/AER fixed
- Monthly Interest Option = 3.65% gross/3.72% AER
- Deposit from £500 to £2 million
- Quick and easy online application with instant account opening
- Monthly interest option also available
- No extra deposits or withdrawals after opening
- Close your Bond early if necessary (breakage fee applies)
Post Office 2 Year Fixed Term Bond
- Great fixed rate for 2 year fixed term
- Annual Interest Option = 3.63% gross/AER fixed
- Monthly Interest Option = 3.57% gross/3.63% AER
- Deposit from £500 to £2 million
- Quick and easy online application with instant account opening
- Monthly interest option also available
- No extra deposits or withdrawals after opening
- Close your Bond early if necessary (breakage fee applies)
Vanquis Bank 3 Year Fixed Rate Bond
- Available Online Only.
- Deposit between £1,000 to £250,000 for THREE YEARS in ONE PAYMENT and benefit from a guaranteed savings rate.
- Annual or Monthly interest options available.
- Sole or Joint Accounts.
- Restricted to UK residents 18 years or older.
- No additional deposits, withdrawals or closure during term.
- Vanquis Bank is a UK bank with operations and call centres in London, Chatham, Bradford and Newcastle, and is part of the Provident Financial Group, a FTSE 250 company founded over 130 years ago.
- YOUR SAVINGS ARE PROTECTED UP TO £85,000 BY THE FSCS - Financial Services Compensation Scheme
Vanquis Bank 5 Year Fixed Rate Bond
- Available Online Only.
- Deposit between £1,000 to £250,000 for FIVE YEARS in ONE PAYMENT and benefit from a guaranteed savings rate.
- Annual or Monthly interest options available.
- Sole or Joint Accounts.
- Restricted to UK residents 18 years or older.
- No additional deposits, withdrawals or closure during term.
- Vanquis Bank is a UK bank with operations and call centres in London, Chatham, Bradford and Newcastle, and is part of the Provident Financial Group, a FTSE 250 company founded over 130 years ago.
- YOUR SAVINGS ARE PROTECTED UP TO £85,000 BY THE FSCS - Financial Services Compensation Scheme
Scottish Widows 3 Year Fixed Rate Bond
- The Scottish Widows 3 Year Fixed Rate Bond is a fixed interest rate account offering a competitive 3.50% AER over a period of three years.
- The account is available to new and existing Scottish Widows Bank customers and is not linked to any investment products.
- Fixed annual rate 3.50% Gross
- Minimum deposit £10,000
- Deposit Term - 3 years
- No partial withdrawals permitted during deposit term.
- *Stands for the Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once each year.
- YOUR SAVINGS ARE PROTECTED UP TO £85,000 PER PERSON BY THE FSCS - Financial Services Compensation Scheme
United National Bank 1 Year Fixed Rate Bond
- Guaranteed rate of interest for full term of product
- Minimum deposit of £2,000
- Interest payable monthly or on maturity
- Penalty for early withdrawal
- Available as sole or joint accounts
- Must be UK resident and 18 years of age or older
- Must have an account with an existing UK bank
- YOUR SAVINGS ARE PROTECTED UP TO £85,000 BY THE FSCS - Financial Services Compensation Scheme
United National Bank 2 Year Fixed Rate Bond
- Guaranteed rate of interest for full term of product
- Minimum deposit of £2,000
- Interest payable:
- monthly (3.45% Gross)
- yearly (3.50% Gross)
- maturity (3.56% Gross)
- Penalty for early withdrawal
- Available as sole or joint accounts
- Up to £85,000 per depositor is protected by FSCS
- Must be UK resident and 18 years of age or older
- Must have an account with an existing UK bank
- YOUR SAVINGS ARE PROTECTED UP TO £85,000 BY THE FSCS - Financial Services Compensation Scheme
The Cambridge 2 Year Fixed Rate Bond
- Exclusively available to open online
- Allows you to invest your savings for a fixed term at an interest rate that won't change
- You need a minimum of £1,000 to open your account
- Online account management
- You can add to the balance of your account whilst The Cambridge 3 Year e-Bond Issue 5 remains open to new savers
- Withdrawals are not permitted during the fixed rate term
- The Cambridge 3 Year e-Bond Issue 5 will mature on 27th May 2015
- Interest is calculated daily and paid annually on 31st December or monthly on the last day of the month
- This is a limited issue - the bond will be withdrawn when fully subscribed
- YOUR SAVINGS ARE PROTECTED UP TO £85,000 PER PERSON BY THE FSCS - Financial Services Compensation Scheme
