The Growth Bond (Issue 22) range includes a one-year product that before tax yields an annual equivalent rate of 1.6 per cent, a two-year at 1.85 per cent and a three-year bond that pays 2 per cent.
Meanwhile, savers using the Online Bond (Issue 11), will be able to choose between the one-year option (paying up to 1.61 per cent), the two-year (1.86 per cent) and the three-year (2.01 per cent).
The minimum opening deposit for both products is £500, with a maximum £1m for the Growth Bond and £2m for the Online Bond.
No additional deposits are permitted during the fixed term for any of the bonds.
Withdrawals are also not allowed and can only be accessed in “exceptional circumstances” where they may be subject to a “breakage fee”.
The Post Office confirmed that interest on the Growth Bonds will be added on the anniversary of the account opening, while the one-year product will be paid interest at the end of the term.
Interest on the Online Bonds can be paid either monthly or annually, with a further option to capitalise interest to the account or pay it into a nominated account.
Growth Bond applications are available in Post Office branches, by phone or by post, while the Online Bonds are available online only.
Provider view: Henk Van Hulle, head of savings and investments for Post Office, said: “The Post Office continues to support savers’ needs by introducing competitive rates on new issues of online bond and growth bond, offering one, two and three-year options. As one of the UK’s leading savings providers, we remain committed to giving our customers the best rates possible, especially in such a tough savings environment. With a minimum deposit of £500, as well as very attractive interest rates, these products are designed to cater for the varying needs of today’s savers.”
Adviser view: Warren Bentham, an IFA and head of paraplanning for Chester-based 75point3, said: “Any increase in the availability of competitively priced deposit accounts will be warmly welcomed by savers and healthy competition on rates can only help push them up further as banks and building societies compete to attract savers’ funds. While the new rates being offered by the Post Office are relatively good compared to the sector as a whole, they are not the best available on the market at the current time. Savers who are willing to shop around on the high street can achieve rates of at least 1.7 per cent over a year, 2.0 per cent over two years or 2.3 per cent over three years, with yet higher rates still available for any client happy to invest online or by lesser-known institutions. It should be made clear to savers that are interested in these rates that the Post Office accounts are provided by Bank of Ireland UK and are therefore no different from any other account offered by a UK bank in terms of the protection that they provide. Savers should, therefore, ensure that their total savings balances across all Bank of Ireland UK accounts do not exceed the Financial Services Compensation Scheme limit of £85,000.”
Charges: There are no charges for opening an account.
Verdict: Savers can find slightly better rates through alternative lenders or building societies, with the maximum interest offered on one-year fixed rate bonds currently 1.9 per cent, 2.32 per cent for two years and 2.70 per cent for three years.
