This comparison simply includes all savings accounts.
Pensioner Bond Maturity - 5 Ideas For Your Cash
Why we like it: Fee Free Account. An everyday current account. Great money management tools with our mobile banking app. ‘Criteria Apply’. Multiple ways to pay: Apple Pay, Google Pay™ and Contactless Visa Debit Card. Limits apply. Arranged overdraft available (subject to eligibility). No monthly fee. Defaqto 5* rated. Must be 18 or older and UK resident. Representative example: If you use an arranged overdraft of £1,200 you’ll be charged interest at 39.49% EAR variable. To get the £100, use the Current Account Switch Service to close your account held elsewhere and switch by 5pm on 2nd December 2021. Then pay in at least £1,500 in total and log into Online or Mobile Banking by 13th January 2022. To get a further £50 you have to make at least 10 eligible debit or credit transactions each month between 1st January 2022 and 30th September 2022. Offer T&Cs apply. Account eligibility criteria apply. Apply online only
Why we like it: Earn £4 a month back in Rewards by making a minimum of 2 direct debit payments of at least £2 each, or earn £1 a month in rewards with 1 mobile app login. Earn Rewards that you can redeem as cash back, gift cards or e-codes with our retail partners. Great money management tools with our mobile banking app. ‘Criteria Apply’. Arranged overdraft available (subject to eligibility). Multiple ways to pay: Apple Pay, Google Pay™ and Contactless Visa Debit. Must be 18 or older and UK resident. Customers need to pay at least £1,250 into any eligible personal current account every month (excludes transfers between your own accounts). Must not currently hold 2 Reward accounts. £2 monthly fee. Representative example: If you use an arranged overdraft of £1,200 you’ll be charged interest at 39.49% EAR variable. To get the £100, use the Current Account Switch Service to close your account held elsewhere and switch by 5pm on 2nd December 2021. Then pay in at least £1,500 in total and log into Online or Mobile Banking by 13th January 2022. To get a further £50 you have to make at least 10 eligible debit or credit transactions each month between 1st January 2022 and 30th September 2022. Offer T&Cs apply. Account eligibility criteria apply. Apply online only
Why we like it: No minimum monthly funding or monthly fee to maintain the account. Earn up to 15% cashback with Retailer Offers. Stress-free account switching in 7 days with the Current Account Switch Service. £300 ATM withdrawal per day, Arranged Overdraft facility (subject to status). Online and Mobile Banking with text and email alerts. Must be 18 or older and live in the UK permanently. 39.94% EAR overdraft charge. Bank is registered with the Financial Services Compensation Scheme (FSCS), so any money you keep will be fully protected, up to £85,000. £130 cashback when you complete a full switch to a Santander Everyday Current Account within 60 days, set up 2 Direct Debits, pay in £1,000 and log into Online or Mobile Banking. T&Cs apply.
Why we like it: SPECIAL OFFER - £100 for SWITCHING to a First Direct 1st Account. Access to Regular Saver Account paying 1.00% AER/Gross fixed for 12 months if saving between £25 and £300 a month (up to £3,600 per year). £250 interest-free overdraft (subject to status). No minimum monthly funding and no monthly account fee. Mobile banking app. UK based contact centre. To qualify, switch using the Current Account Switch Service, deposit £1000 within 3 months of account opening. New customers only that have not opened a HSBC account on or after 1 Jan 2018
Why we like it: SPECIAL OFFER - Get £110 + £30 Uber Eats voucher or The Dining Out Gift Card when you switch to an HSBC Advance Bank Account. Earn 1.00% AER/gross when you save between £25 and £250 per month. Arranged overdraft limit of at least £1,000 on account opening. Money banking app. No monthly account fee. Easy switching with the Current Account Switch Service. Must be 18 or older and be UK resident. Must pay in £1,750 per month or £10,500 over 6 months. Must be approved for an arranged overdraft of £1,000+. Get the £110 when switching to an HSBC Advance Account as a new customer using the Current Account Switch Service within 30 days of account opening, with at least 2 Direct Debits or standing orders. Eligibility criteria and T&C's apply. Offer may be withdrawn anytime. Offer isn’t available to customers who have held a HSBC current account, or opened a first direct account since 1 January 2018. Offer ends 31st October 2021
Why we like it: SPECIAL OFFER - £130 cashback when you switch to a Santander 123 Current Account. Earn 0.30% AER (variable) interest on balances up to a maximum of £20,000. Up to 3% cashback on household bills - 1% on council tax bills, Mobile and home phone bills, broadband and paid-for TV packages, and Santander monthly mortgage payments. 2% on Gas and electricity bills, Santander Home Insurance premiums and Santander Life Insurance premiums, and 3% on water bills. Monthly fee of £4. Cashback capped at £5 for each cashback tier each month. Must pay in £500 pm. Bank is registered with the Financial Services Compensation Scheme (FSCS), so any money you keep will be fully protected, up to £85,000. £130 cashback when you complete a full switch to a Santander 123 Current Account within 60 days, set up 2 Direct Debits, pay in £1,000 and log into Online or Mobile Banking. T&Cs apply.
Why we like it: Free current account. Pays 0.05% AER interest on balances up to £85,000. Get set up in minutes. Send money abroad: Fast and secure money transfers to bank accounts in 38 countries worldwide. No fees when you pay with your card abroad or withdraw money. Get a spotlight on your spending: See what you’ve spent instantly with real-time payment notifications. 3 month interest holiday on the first £500 of an arranged overdraft. Best British Bank and Best Current Account in 2020 at the British Bank Awards. Awarded 5 stars by Defaqto. Bank is registered with the Financial Services Compensation Scheme (FSCS), so any money you keep will be fully protected, up to £85,000
Why we like it: Up to 3% cashback on selected household bills, capped at £5 for each cashback tier each month. Earn up to 15% cashback with Retailer Offers. Easy to manage online or on mobile app. Get access to a range of 123 offers. Arranged Overdraft facility (subject to status) - 39.94% APR / EAR (variable). Must be 18 or older and UK resident. Customers must pay a minimum of £500 into account each month, have 2 active Direct Debits, log onto Online or Mobile Banking at least once every 3 months. Must not currently hold 2 Reward accounts. £2 monthly fee. £130 cashback when you complete a full switch to a Santander 1|2|3 Lite Current Account within 60 days, set up 2 Direct Debits, pay in £1,000 and log into Online or Mobile Banking. T&Cs apply
Why we like it: Can be opened by or on behalf of any child up to the age of 17. Debit or cash card available for those aged between 13 and 17. Monthly interest. No monthly fee. For children under age 13, the account must be opened in trust and managed by an adult (trustee). If you’re aged between 13 and 17 years old and live permanently in the UK you can apply online by telephone or in branch. No overdraft facility. 1% interest on the entire balance once the balance is £100, 2.00% AER/1.98% gross (variable) on the entire balance once the balance is £1,500, 3.00% AER/2.96% gross (variable) on the entire balance once the balance is £1,500 or over (up to a maximum of £2,000). Bank is registered with the Financial Services Compensation Scheme (FSCS), so any money you keep will be fully protected, up to £85,000
Why we like it: A bank account that can build credit history. No credit check during sign up. Apply straight from your mobile. Instant online decision. Get your Contactless Debit Mastercard within 3-5 working days. Add Creditbuilder onto your account and it could help build your credit rating at no extra cost. Deposit cash into your account at any Post Office UK branch. Money is available in your account immediately. Manage your account 24/7 from any device with the banking app - get real time balance information, statements, add payees send payments and apply for extras. Automatic payment alerts. UK based Customer Services Team. Your money is protected up to £85,000 by the FSCS (Financial Services Compensation Scheme)
Why we like it: Instant access to your savings. Unlimited deposits and withdrawals. Interest paid monthly, either to a linked current account, or adding it to your Online Flexi Saver account. Easy application process, you just need a UK mobile phone and UK driving licence or passport. Manage account online. Maximum balance £250,000. Must be aged 18 or older and have a UK address. Must have a linked UK current account. Your eligible deposits with Investec Bank are protected up to a total of £85,000 by the Financial Services Compensation Scheme (FSCS)
Why we like it: 0.60% AER if customer makes two or fewer withdrawals within an anniversary year. Monthly or annual interest. Manage your account online. Covered by the FSCS. If a customer makes three or more withdrawals in an anniversary year the rate reduces to 0.10% from the date of the third withdrawal. Must be UK resident and be aged 18 or older
Pensioner Bond Maturity
5 Ideas For Your Cash
In January 2015, an agency of the government called National Savings and Investments (NS&I) introduced a special fixed rate bond, which was specifically designed for those over 65.
This special fixed rate bond, also known as the pensioner bond, was made available to try and encourage more pensioners to put money aside for their retirement.
The pensioner bond offered some of the most competitive interest on the market. The NS&I had two separate bonds with different fixed terms: the one year bond, which had an interest rate of 2.8%, and the three year bond with 4% annual interest.
From January 2018 Pensioner Bonds will begin to mature
Features Of Fixed Rate Pensioner Bonds
The two pensioner bond options had the ability to allow savings to grow significantly over the lifetime of the bond. They had a minimum deposit of £500 and a maximum deposit of £10,000.
Unlike other fixed rate bonds, where you are sometimes offered a short period of time at the start of the fixed term to change your deposit, with the pensioner bond there was no cooling off period and your decision to deposit the money was final.
If you wanted to withdraw any savings from the fixed rate bond within the fixed term, you incurred a penalty equal to 90 days’ of interest.
From April 2016, basic rate tax payers could earn up to £1,000 in interest without paying tax and higher tax rate payers can earn up to £500 in interest before paying tax.
As the pensioners bond was available prior to the new tax rules, anyone who took out a bond in 2015 was only subject to the old tax rules for one year.
Although these fixed rate pensioners bonds were subject to tax, many felt that the rate of interest outweighed the tax their interest would incur. This was because the bonds' rates of interest were significantly higher than those offered with banks or building societies.
The Ability To Earn 4% Through Pensioner Bonds Has Gone
In May 2015, the NS&I withdrew the pensioner bond. At the time, the pensioner bond had one of the highest interest rate on the market. As the pensioner bond is no longer available, the ability to earn up to 4% on a three year fixed rate bond has disappeared.
The NS&I have launched a new pensioner bond that offers a much lower interest rate of 2.2%.
Pensioner Bond Matures
From January 2018, those who took out a three year fixed rate pensioner bond will receive their initially deposited capital, along with the interest accumulated over the course of the bond.
If you took out a three year fixed rate pension bond, then providing you did not make a withdrawal throughout the entire bond, you should receive your money and the 4% annual interest. For example if you deposited £10,000 then you will receive £11,300 when the bond matures.
The question that you may face now is what to do with your money upon maturity of your bond. Many who took out the pensioner bond might have intended to deposit their money into another pensioner bond, to access a similar competitive interest rate. However, now the ability to earn 4% interest through a pensioner bond is not available, it may be more difficult to decide what to do with your money.
If you want to change your savings strategy, you have to act quickly. This is because the NS&I will simply reinvest your money into their new bond, if you do not provide written instruction. In the event you fail to notify the NS&I, you will have an additional 30 days “cooling period” to do so.
It cannot be stressed harder that if your savings are re-invested into the NS&I new bond that pays only 2.2%, then you could see your return drop comparatively by 43% upon maturity.
Current Interest Rates
When faced with a decision about what to do with their savings, the majority of people will open a savings account. The problem with opening a savings account is that the interest rates offered are at record low levels. Whether it is an instant access account, regular savings accounts or easy access account, you are not likely to receive a high rate of interest.
There are some current accounts available that provide higher interest rates than some savings accounts. Banks are desperate for your business and a number of them offer attractive rates, cash back on bill payments and cash rewards for switching to their current account. It should be noted that these attractive rates of interest usually come with low thresholds, over which interest will not be paid.
Therefore, high interest rate current accounts may be a good option but only for smaller amounts. Some savers will begrudgingly deposit their money into savings accounts or current accounts and feel satisfied that they are earning at least some interest on their savings.
The issue with this mind-set is that current interest rates currently sit well below inflation. This means that if you deposit your savings into a fixed rate bond or savings account, the value of your money is decreasing in real terms.
How To Earn More Interest
If your three year fixed rate pensioner bond has recently matured, you are probably looking for a way to replicate the same amount of interest you enjoyed over the last three years.
The problem is that you will not receive 4% annual interest in the current market. Below we explore five different ways to access higher rates of interest and grow your savings.
5 Ideas For Your Cash
It may be worth exploring the option of using a combination of the ideas below. By splitting your savings into a selection of the options available to you, you could earn competitive rates of interest whilst enjoying a certain amount of capital protection.
1.Fixed Rate Bonds
Some of the best fixed rate bonds on the market provide better returns than the new NS&I bond. Therefore, depositing savings into another fixed rate bond with a bank or building society may be an attractive option.
Fixed rate bonds offer the opportunity to earn more interest in exchange for restricted access to your savings. Banks and building societies usually offer fixed rate bonds that run between 1 and 5 years. Typically, the longer fixed rate bonds offer the highest interest.
Fixed rate bonds are popular among savers, as they can allow you to earn a defined amount of interest with no risk to your capital.
Although some banks offer higher interest than the new NS&I bond, the rates of interest on offer are only marginally better and still do not counter the effect of inflation. In light of this you may wish to deposit a certain amount of your savings into a new fixed rate bond and split the rest between other options.
Taking On More Risk
If cash products continue to offer a lower rate of interest than the prevailing rate of inflation, then savers will lose money in real terms.
Gone are the days where you could earn competitive interest from high street cash products, if you want to get the equivalent yield of 4% or more, you may have to consider taking on more risk.
But whilst the combination of low savings rates and high inflation may force more of us to consider investing, this raises the difficult question of taking on more risk in an attempt to replicate historical levels of income enjoyed from cash based products.
Below is a selection of options that, if you are prepared to take on more risk, may help you achieve higher returns on your savings.
2.Investec FTSE 3 Year Defensive Deposit Plan
The new 3 Year Defensive Deposit Plan from Investec offers the opportunity to receive 10% growth on your investment, which equates to a return of 3.3% each year.
The Plan is designed to run for 3 years and has a minimum investment of £3,000 and a maximum investment of £1,00,000. It also has the ability to earn tax-free return, if held in an ISA. (with a maximum deposit of £20,000).
The Plan compares the value of the FTSE at the beginning and at the end of the term. If the FTSE is above 90% of its starting value, then you will receive the fixed return of 10% (3.3% AER).
This gives you the potential to access higher interest rates than those on offer with cash based products.
It should be noted that the returns are not guaranteed. This means that, if the FTSE drops by 10% or more of its starting value, you will only receive the capital you initially invested.
3.Investec FTSE 5 Year Defensive Deposit Plan
Investec's new 5 Year Defensive Deposit Plan has the ability to provide 20% growth for your capital, which equates to 4% AER.
The Plan is designed to run for 5 years and has a minimum investment of £3,000 and a maximum investment of £1,00,000. It also has the ability to earn tax-free return if held in an ISA (with a maximum deposit of £20,000).
As with the 3 year option, the Plan is closely linked to the FTSE and will provide the return provided that the FTSE does not drop by 5% or more.
Although the growth from both Investec Plans above is dependent on the performance of the FTSE, you are guaranteed to receive your capital in full at the end of the Plan.
This is because the Plan benefits from protection of the Financial Services Conduct Authority (FSCS), which means that whatever happens up to £85,000 of your capital is protect.
Risk v Reward
You may want to consider putting your capital at risk for the chance to access higher returns.
When it comes to capital at risk products there is always a question of risk versus reward. A good benchmark for assessing your fixed rate investment is to compare what you could get from a fixed rate deposit over a similar timeframe, and then consider whether you are prepared to accept the level of risk to your capital in return for the higher fixed rate.
Below are some capital at risk options that have the ability to provide higher returns than the majority of options on the market.
4.Peer To Peer Lending
There are some companies that offer peer to peer lending services, which is where you lend your money to a borrower for a set period of time.
The longer the agreed time, the higher the returns you could receive. For example there are some companies on the market that offer a return of 5% per month for a 5 year fixed term.
Although peer to peer lending has the potential to earn you high returns, it is important to note that peer to peer lending is a capital at risk option.
This means that you may lose a certain amount or all of your capital, if the borrowers do not repay.
5. Investec FTSE Defensive Income Plan
If are happy to lock up your money for a longer period of time, you want the potential to see some serious growth and you are happy to put your capital at risk, then Investec's FTSE Defensive Income Plan could be the option for you.
Investec's FTSE Defensive Income Plan has the ability to provide a return of 1.825% each quarter, which equates to 7.3% annual income.
The Plan is designed to run for 8 years and has a minimum investment of £3,000 and a maximum investment of £1,00,000. It also has the ability to earn tax-free return if held in an ISA (with a maximum deposit of £20,000).
Similarly to the other Investec Plans, this Plan is closely linked to the FTSE but the value of the FTSE is measured quarterly (instead of at the beginning and end of the Plan).
Therefore, so long as the FTSE does not drop by 20% or more from its starting value at the end of each quarter, the Plan will provide the 1.825% return. This means the FTSE can fall up to 81% of its starting value and you will still receive the quarterly return.
Although the Plan is designed to run for 8 years, it has the ability to kick out or mature early every quarter from the second year of the plan onwards. The Plan will only mature early if the FTSE increases by 5% of its starting value. In the event the Plan matures early, the capital and any return for that quarter is paid in full.
The Plan is a capital at risk product. The treatment of your capital is also dependent on the performance of the FTSE. If the FTSE drops by 40% or more of its starting value, then your capital will be affected. In the event that the FTSE does fall by 40% or more, your capital will reduce by 1% for every 1% the FTSE falls.
If you think that the FTSE is unlikely to fall significantly in the near future, then this might be a good option for you.
Whatever you decide to do with the money you receive from you pensioner bond, you should do your homework.
Before using any capital at risk product, you need to do your research and understand the potential consequences.