Santander has introduced three fixed-rate bonds to provide savers with good rates of return despite dropping interest rates.
“Fixed-rate bonds give savers a certainty of return,” said Reza Attar-Zedah, Santander’s director for investment and savings. “For savers who may prefer a bond rate that tracks the Bank of England base rate, our tracker bond is a good option," he added.
The new two-year bond has a 3.65 per cent gross AER for an investment of up to £24,999, or 4 per cent for anything between £25,000 and £2m. The one-year tracker bond will track 2.6 per cent above the base rate of the Bank of England until maturity - the current gross AER rate is 3.1 per cent. In both cases, withdrawals or early closures are not permitted until the bond reaches maturity.
By contrast, Investor Profile director Jaskarn Pawar advised consumers to consider all available options before committing to a fixed-rate bond. “I counsel against being wealthy and feeling poor, which happens if you have lots of wealth that is tied up in fixed-term savings and investments that cannot be accessed for spending.”
