Coventry BS launches Poppy Bond paying 3.5%Get 3.5% on fixed savings until 30 April 2013

29 October 2010

Piggy bank with padlock, fixed rate savings bond

If you're able to lock your cash away in a fixed-rate bond, you could get a higher rate

Coventry Building Society has launched a new edition of its Poppy Bond, which offers savers 3.5% AER on their money until 30 April 2013.

The account can be operated by telephone or online, and like previous issues of the Bond, this fifth version of the account will make a donation to The Poppy Appeal based on how much you deposit.

One month after the bond is withdrawn from sale, 0.20% of the balance of an individual’s account will be given to the appeal – so if you had £20,000 invested in the bond at this point, The Poppy Appeal would get £40.

The Poppy Bond and leading fixed-rate savings accounts

Like many other fixed-rate savings accounts, the Coventry Poppy Bond demands a fairly high initial deposit of at least £500.

The maximum that can be invested in the account is £250,000 – but it’s worth remembering that the Financial Services Compensation Scheme only guarantees a maximum of £50,000 per individual, per financial institution. By placing the maximum amount of money permitted into this bond, you’d be putting a high proportion of your cash at risk. (Read more about this in the Are my savings safe? advice guide.)

The interest rate payable on the Poppy Bond is fixed at 3.5% from the date the account is opened until 30 April 2013. This is a reasonably competitive deal, although higher rates are available on three-year fixed-rate bonds. You can look at the latest fixed-rate savings deals by visiting our Best Rate savings accounts review.

Poppy Bond small print

As with all fixed-rate savings accounts, locking into a specific interest rate will protect you in the event there are further interest rate drops – but it will also mean you do not benefit from rate rises should they occur.

Again, as is typical of fixed-rate deals, you’ll be unable to withdraw money from the Poppy Bond or close it early once you have deposited your cash – so think carefully before opening this account if you think you may need to access your savings during the term of the deal.

It’s also important to be aware that, once you have made your initial deposit to the Poppy Bond, you can only put in extra cash for seven days – or until the account is closed to new customers (whichever is longer). This means the Poppy Bond is best suited to people with a lump sum of money to invest. If you’re looking to build up your savings gradually, a regular savings account or instant access savings account might be better for you.

pound coins

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