Are tracker bonds a smart home for your savings? United Trust Bank launches new best-rate bonds

26 October 2015

Piggy bank with a chain and padlock around it

Which? Money puts the spotlight on tracker savings bonds, which come with rates guaranteed to rise in line with the Bank of England base rate. 

Despite the best tracker bond rates being lower than the equivalent top-paying standard savings accounts, they could still be of interest, as the Bank of England governor Mark Carney has touted a base rate rise from a lowly 0.5% in the coming year.

Here, we highlight the best-rate tracker bonds to find out how they compare and whether they are a good option for savers.

If you want to find out more about these accounts, we've included links to the Which? Money Compare savings tables.

New tracker savings bonds enter the market

United Trust Bank has launched new two-year and three-year tracker savings bonds, with rates beating all other tracker bonds on the market.

The two-year deal guarantees to pay 1.75% AER above base rate (currently 2.25% AER), while the three-year option will pay 2.10% AER above base rate (currently 2.60% AER). 

These accounts can be opened online or by post with an initial deposit of £500.

Are they a good savings account option?

These bonds offer savers the best of both worlds, paying a competitive initial interest rate as well as promising to track the Bank of England base rate. 

They're a great option for savers who are worried about tying up their savings in a standard fixed-rate bond in case the base rate increases and they end up stuck in a less competitive account. Nevertheless, savers should bear in mind that there's no guarantee the Bank of England base rate will rise during the length of the term, and it could even drop further. 

If you prefer a guaranteed fixed rate for the term of the account, the best standard two-year and three-year deals in our tables are from Al Rayan Bank, paying 2.42% AER and 2.73% AER respectively. However, these rates are an 'expected profit rate' from the bank's Sharia-compliant investments, so returns are not guaranteed.

If you're after instant-access to your savings, you may prefer an option from the Which? Money Compare instant-access savings accounts tables

The Which? Money Compare tables let you search hundreds of savings accounts and cash Isa deals from providers large and small so that you can find a good home for your nest egg. We also combine this with our unique customer scores that show you how well the providers featured are likely to treat you in the long run.

Which? Money Compare table: Fixed-rate savings accounts - compare hundreds of deals

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