Investments  

LaunchPad: Savings

The yearly interest rate on the three-year fixed-rate bond from Skipton Building Society has been increased from 2 per cent to 2.15 per cent for those saving up to £25,000. The rate increases further to 2.2 per cent for those saving more than £25,000.

The mutual has also increased the rate on its E-Bond, available online, from 2.05 per cent to 2.15 per cent for those taking the monthly interest option.

Skipton has previously topped the best buy tables when it launched a branch-based five-year fixed rate bond paying 3 per cent.

Article continues after advert

PRODUCT DETAILS

Monthly interest rate on the fixed rate bond is 2.13 per cent for balances under £25,000 and 2.18 per cent for balances over that amount

At the end of the product term, savers will be automatically transferred into the society’s one year bond currently paying 1.4 per cent or 1.5 per cent, depending on the saver’s balance

Withdrawal or early closure of the bonds are not allowed

Savers can make additional investments into the bonds until they become closed issues, which may be at any time and without notice

ADVISER VERDICT

Keith MacDonald, certified financial planner at Worcestershire-based Broadway Financial Planning, said: “If you simply need a cash reserve, a fixed-rate bond is fine. However, I am wary about fixing for three years in the current environment, where rates are bound to go up sooner rather than later.

“Mark Carney at the Bank of England is playing his cards close to his chest, but I do think savers need to be prepared for a rise. There are online accounts that do not pay much less than these bonds and give you more flexibility.

“Clients who are targeting financial independence and need to generate income for the rest of their life need returns above inflation. Safety in cash can really harm clients in the long-term.”