Nationwide has improved the rates on its long-term bonds and ISAs, but they still fall short of the market leaders in this sector.
The society has launched new a four-year bond and ISA paying 2.4% alongside a five-year issue of each product paying 2.5%.
The latest four-year bond, which is also available through the Derbyshire, Cheshire and Dunfermline Societies, is a full half-point increase on the previous issue (1.9%). The five-year bond is a new release. After tax, however, the maximum return available is just 2%.
(Find out more about the difference between cash ISAs and fixed-rate bonds.)
The move follows the improvements made by Leeds Building Society to its long-term fixed-rate savings products, but Nationwide remains some distance behind the smaller mutual.
Leeds improved the rate on its five-year bonds and ISAs to a market-leading 3.05% this week. A flexible product that offers some access to funds is also available, at 2.90%.
By contrast, the Nationwide’s new terms mean that savers will still fail to match inflation, even if they choose to lock away their funds until 2018.
Nationwide's improved bonds and ISAs better many high-street rivals, but remain some way from the top.
Darren Bailey, Nationwide’s head of savings pricing, says that the new products “beat the rates offered by other major high-street competitors”. But competition stretches far beyond the largest banks.
The Nationwide’s four-year bond is also bettered by Vanquis’ three-year equivalent (2.41%), which might seem a more attractive option for investors unwilling to lock away their funds for so long.
Experts are warning savers against securing their cash for longer terms while rates remain at their historic low.
But savers will feel entitled to ask when conditions are set to change, with an extension of the Funding for Lending Scheme already in the pipeline and the Bank of England claiming that interest rates will remain low until 2016.
Keith McDonald
Which4U Editor
If you enjoyed this article:
- Check out the latest articles on our Finance Blog.
- Sign up for our free e-newsletter.
- Follow us on Twitter for regular updates.
{loadmodule php,TwitterButton}