I’m looking for security rather than risk
IN THE short term, at least, further cuts to both the base rate and savings rates generally cannot be ruled out. So a fixed rate savings bond has appeal.
The best one-year savings bond, from Charter Savings Bank, pays 1.46 per cent fixed interest.
Rates on three and five-year fixed rate bonds are better (Close Brothers pays 1.7 per cent for three years while a number of providers pay 2 per cent for five years). But savers taking out these need to be aware that they could get caught out if rates start rising
LURE OF THE FIXED RATE BOND
again. Earlier this month, 49year-old tennis and squash coach Tim Drew took out a oneyear savings bond with Paragon Bank, locking into a rate of 1.55 per cent (the bond is no longer available to new customers). He chose the short- term bond because he thinks the base rate will be pushed up at some stage.
Tim, from Taunton in Somerset, worked in the City for 20 years as a bond dealer. The experience has left him adamant that he should not take any risk with his savings.
He says: ‘I like my savings to be secure. It’s an unexciting approach but I don’t want to take risks with my hard-earned savings.’
Although Paragon is not a familiar brand in the savings market, he was assured by the fact that savings are protected by the Financial Services Compensation Scheme up to £75,000. He funded the bond with money from his NatWest current account which was earning nothing in interest.