The limited opportunity for savers to land the best rates has been illustrated again, after Kent Reliance (KRBS) withdrew its market-leading fixed-rate bond range after just three weeks.
Kent Reliance launched its latest bond issues on July 11. The one-year bond promised to return 2.05%, while the two-year bond offered 2.35%.
But the provider is now listing the deals as “sold out”, staying true to its earlier intimation that the bonds were “strictly limited edition” (read more).
However, a re-emergence from ICICI Bank sees its two-year bond (2.30%) competing with the Islamic Bank of Britain (2.32%) at a fraction below the withdrawn KRBS account.
The one-year bond table is now headed by Britannia at 2.03%, which requires a minimum bond deposit of £1,000. Close behind are the little-known Raphaels Bank at 2.00% (min. £5,000) and the Post Office at 1.99% (min. £500).
There is little incentive to fix between the two, however, with IBB offering 2.02% on an 18 month bond (min. £1,000), and Metro Bank narrowly behind at 2.00% (min. £500).
Savings rates are still heading downwards, as savers compete for limited edition offers.
Long-Term Prospects?
Savers might be more interested in longer-term bonds, however, given today’s overtures from the Bank of England suggesting that interest rates are set to remain low for the foreseeable future.
ICICI holds the top spot for three-year bonds, at 2.55%, while its five-year bond, at 2.75%, sits third behind only Shawbrook Bank (2.90%) and Secure Trust Bank (2.91%) for that term.
Skipton Building Society leads the way, at 3.50%, but savers will have to lock their funds away until 2020 to reap the rewards, which are still currently below inflation after tax is deducted (read more).
Q. I haven’t heard of some of these banks before? How safe are my deposits?
A. The majority of banks with a license to operate in the UK (including ICICI, IBB, Kent Reliance BS and the private Raphaels Bank) are regulated by the Prudential Regulation Authority and Financial Conduct Authority, and are members of the Financial Services Compensation Scheme (FSCS).
The FSCS protects deposits up to £85,000 per person per institution.
A rare exception to this is a bank like Handelsbanken, where deposits are protected by the Swedish compensation scheme for up to €100,000 under the European ‘Passport’ system.
See our guide to 'Secure Savings and Compensation' for more details.
Keith McDonald
Which4U Editor
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