Banking/Savings Section

A Top Paying 2 Year Fixed-Rate Bond - Pays Between 5.45% - 5.65%

November 2006

The Scarborough Building Society has just launched a top paying 2 year fixed-rate bond.

Quick details -

• It's called the Guaranteed Bond Account
• Interest rate is fixed at 5.45% for balances up to £10k, 5.55% for balances up to £25k and 5.65% for £25k+
• Minimum investment £1,000, maximum £500,000
• The account allows no withdrawals but can release money in an emergency which costs a hefty 6 months lost interest
• Option for interest to be paid monthly or yearly, yearly interest pays slightly more

Summary

The interest rate at 5.65% for deposits of £25,000 is great but whereas on one hand investors are rewarded there is one hell of a penalty to pay (6 months lost interest) should you want your money before the 2 year term is up.

So if you have less than say £10,000 in savings it’s better in our opinion to go with the instant access IceSave account which pays 6.05% - see this article for more details.

But for savers with £50,000 or more then locking up a portion of your money (say 25%-50%) in a fixed term savings account with good interest rates looks a sound approach. The balance of the money can then be deposited in instant access accounts.

See Also

• The Scarborough Building Society
• The IceSave Instant Access account pays 6.05%
• Find's list of Savings Accounts