The launch of two best-buy fixed-rate bonds has signalled a rare piece of good news for savers this week, though returns still remain far shy of inflation.
Kent Reliance Banking Services (KRBS) will today release new issues of its one-year and two-year fixed rate bonds with improved rates.
The one-year and two-year bonds, at 2.05% at 2.35% respectively, now top the tables when compared to similar term products.
The bonds require a minimum deposit of £1,000 and can be opened in branches, by post, or online.
KRBS is followed closely behind by the Britannia, which has also hiked rates on its one- and two-year bonds to 2.03% and 2.21% respectively.
The clock is already ticking for savers on the "strictly limited edition" market-leading bonds from KRBS.
Slim Pickings for Savers
The outlook for savers has been grim over the past 12 months, following the launch of the Funding for Lending Scheme in August 2012.
The availability of cheap funds from the Government has encouraged banks and building societies to offer lower returns on standard retail deposits.
Such has been the deterioration that savers who fix for two years now receive an average of just 1.8% on their bonds – over a whole percentage point below inflation after tax has been deducted.
Accordingly, savers' eagerness to snap up market-leading rates has meant that leading deals have a precariously short lifespan – a caveat that KRBS has acknowledged.
John Eastgate, KRBS’s marketing director, said that the new bond issues were available "on a strictly limited edition basis".
“These products are limited edition and can be withdrawn at any time without notice and no further applications will be accepted,” the society said.
KBRS
KRBS is best known for its inflation-busting regular saver accounts. At 4.00% (3.20% net), these accounts offer rare protection against the rising cost of living, but allow only a small amount to be deposited each month.
Though not particularly well-known, depositors with KRBS are given the same protection by the Financial Services Compensation Scheme (up to £85,000 per person) as any other mainstream bank.
(See our latest blog article for some of the benefits of smaller banks.)
Keith McDonald
Which4U Editor
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