The Post Office is looking to entice savers who want to lock away their money with a competitive new range of fixed-term bonds, launched today.
As the Bank of England holds the base rate at a record low of 0.5% for the fourteenth consecutive month, the Post Office Growth Bond is offering one-, two- and three-year terms and annual equivalent rates (AER) up 4.10%.
Fixed-rate bonds offered
The Post Office believes that at a time when savings rates are still very low, the new range of Growth Bonds offer guaranteed returns at attractive rates. The one-year bond is paying 3% AER, the two-year bond is offering 3.7% AER while the three-year bond is paying 4.1% AER. Interest on your savings is paid annually.
Minimum investment stands at £500, and it is important to remember that you are not permitted to make any withdrawals during the fixed term, and closure of the bonds before the end of the term will incur a breakage fee.
High but not so mighty
Comparing the launch with other one-year savings bonds in Which? Money’s Best Rate tables shows that the Post Office’s offering is one of the best rates available at the moment, on a par with Northern Rock and Kent Reliance, and just outstripped by Julian Hodge Bank and Norwich and Peterborough Building Society, which are currently offering 3.05% on their one-year, fixed-rate savings bonds.
However, the Post Office bonds, which are launched as a joint venture with the Bank of Ireland, are not ranked in the Which? Money Best Rate tables, because it is not a full member of the UK’s financial services compensation scheme, which guarantees redress up to £50,000 for savers if a financial institution fails.
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