6.5% Fixed Interest on 2 & 3 year Bonds - Great Deals
July 2007
The Leeds Building Society is fast turning into a real darling for savers because month after month it seems to produce outstanding deals.
Their latest ones are on 2 and 3 year fixed rate bonds, both paying a fixed rate of 6.5% (AER) gross a year.
- The 3 year bonds allows one penalty-free withdrawal of up to 50% of the initial amount invested
- The 2 year bond allows one penalty-free withdrawal of up to 25% of the initial investment
- The minimum investment is £5,000 and the maximum is £500,000 for the 3 year bond
- Minimum of £5,000 and maximum of £1 million for the 2 year bond
- There is also a monthly income option available at 6.44% (AER) gross on both bonds
- No need to do not need to be an existing Leeds customer and it is not necessary to open any further Leeds B.S. accounts
- Accounts can be opened online, in person at a branch, or by post.
To put these interest rates into perspective, the official Bank of England base rate at the time of writing is 5.75%.
So, who should be attracted by these Fixed Rate Bonds?
Longtime readers of this website will know that flexibility is so important when dealing with your savings. Flexibility in this case means that a portion of your money is never tied up for long periods of time.
If you have less than £5,000 in cash savings, it’s normally wise to place all of it or at least the majority in an account that offers instant access (no penalties for withdrawals). One of the best right now is the IceSave account which pays 6.05% - read this article for more information of the IceSave account.
However, if you have more than £10,000 to invest, why not consider locking up a portion, perhaps 33%, into longer dated fixed rate bonds (2-3 years), another 33% into shorter term fixed rate bonds (1 year), and the balance into instant access.
But even if you invest your savings in the above way it’s still critical to check out the small print because although there are fixed rate bonds offering no penalty withdrawals, there are many that do not. It’s therefore always important to purchase the bonds that offers both the best interest rate combined with the most flexibility.
Summary
The biblical saying of 7 years of famine followed by 7 years of feast is applicable to savers right now. In the past decade UK interest rates moved steadily lower and savers had little to look forward to. But now things are different and if you have cash and are looking for a good interest rate there are some outstanding deals on the market.
See Also
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