Paragon launches three-year bond

Paragon launches three-year bond

Paragon Bank is targeting savers with a three-year fixed rate bond at 1.65 per cent. 

The bond, which pays interest monthly or annually, is available to those able to tie up between £1,000 and £100,000 for the three year period.

The Solihull-based group, believed to be one of the parties interested in buying the troubled Co-operative Bank, has recently launched a suite of high-paying products.

These include a three year cash Isa at 1.3 per cent and a 120-day-notice account paying 1.15 per cent.

Advisers said that the bond, while high paying, may still not be enough to tempt consumers in an era of high inflation.

"While 1.65 per cent is quite good at the moment, inflation is more than that," pointed out Colin Rodger, managing director of Alexander Sloan Financial Planning.

"The current environment is pushing people into higher risk assets such as shares. I'm not sure tying up your money for three years at 1.65 per cent will be attractive enough."

Patrick Connolly, at Chase de Vere said that many would be put off by the three-year term.

"Cash savers have an ongoing dilemma in terms of whether they accept this or take more risk in the hope of earning better returns. For those who remain in cash, we are wary of locking money away for too long at current rates," he said.

Other three-year bonds with higher interest rates include a 1.75 per cent three-year bond from challenger bank Atom, available from £50 upwards, and a 1.76 per cent three-year bond from Masthaven for those with £500 or more to save.

“We review our products regularly to ensure we offer consistently competitive rates. This latest change reflects some increases we’ve noted in the Fixed Rate Bond market and follows increases to our other bond products in recent weeks," said Paragon Managing Director Richard Doe.