One-year bonds offer savers value as banks raise rates

SAVERS who hold one-year bonds will earn three times more interest this year after banks raised rates to post-pandemic highs.

Several accounts that offer more than 2 per cent interest have been recently introduced. One-year deals from Charter Savings Bank, Investec and Kent Reliance pay 2.05 per cent – the first time since November 2019 that rates have topped 2 per cent.

Investing £10,000 in the best oneyear bond a year ago would have yielded £65 in annual interest. The figure today is £205, according to Telegraph Money analysis. This is an increase of £140.

Banks have slowly begun to improve headline rates but failed to keep pace with the increases in the Bank Rate.

Savers who deposit £10,000 into the average one-year bond are losing out on around £22 a year as a result.

Anna Bowes of Savings Champion, an analyst, said: “It’s tricky to know when to tie up your money when rates are rising. Savers could lock some money up for the shorter term while leaving some for better rates that may come along.”