Martin Lewis has warned savings bond holders to move their money. The BBC Sounds and ITV star’s Money Saving Expert team have issued a warning about the new UK savings bonds issued by NS&I.
NS&I is today expanding the choice for savers seeking the security of guaranteed fixed interest rates with the issue of new 2- and 5-year UK Savings Certificates. NS&I is also increasing the interest rate on its existing 3-year UK Savings Certificates.
MSE warns: “With fixed-term deposits, you usually cannot withdraw your money until the end of the term, but the interest rate is guaranteed. So only take out something that you definitely do not need access to. If you want a fixed investment that you may If you want to access money, consider a Cash ISA, which must legally allow you to do so (though usually for a fee).”
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MBNA (part of Lloyds Group) has a one-year fixed rate of 5.15 per cent, while Close Brothers and StreamBank also have rates of 5.1 per cent and 5.05 per cent respectively. Tesco Bank has a rate of 4.81 with a one-year fixed rate, while two-year fixed rates include Harpenden at 4.96 per cent and Hodge Bank at 4.94 per cent. Close Brothers has a rate of 4.9 per cent, while there are three-year fixed rates of 4.72 per cent from Hodge and United Trust, while Oxbury has a rate of 4.66 per cent.
MSE said: “Currently, shorter-term fixed rates of one year or less pay higher interest than long-term fixed rates. However, it’s worth noting that, unusually, notice accounts actually pay the highest interest at the moment – and the best discretionary rates are just a touch below the best fixed rates. So there’s an important question to consider: do you want the flexibility of a discretionary or notice account, or the security of a fixed rate account?
“Remember: the longer you lock in rates, the longer you lose the opportunity to get out and switch to a better deal when rates rise.”
