With Bank of England interest rates on a steady rise, banks and building societies have gradually followed suit with increases in their bond interest rates.
Currently Halifax is offering the best fixed rate bond for one year, at 6.26% before tax (nets to 5.01% after 20% savings tax). There is a minimum investment of £500, and it is an internet deal.
Stroud & Swindon Building Society have a very similar bond at 6.25% (5%) which was launched last week and also has a £500 minimum investment.
Others have been a bit slower to chase the rate. Chelsea BS launched a bond on 12 May paying 6.2% (4.96%) with the rate fixed until August 2008. Birmingham Midshires has a bond paying 6.23% (4.98%).
From 21 May Saga has two new bonds available. Their one-year bond offers 6.23% (4.98% after tax), and their two-year bond offers 6.13% (4.9%). There are also two year bonds available from Leeds at 6.2% (4.96%), and Derbyshire Building Society at 6.15% (4.92%). The bond at Leeds has a minimum investment of £5,000, and in an interesting new arrangement, lets the customer have access to a quarter of the money during the period – without any penalties on interest.
On offer from the Heritable Bank are two or three year deals at 6.16% (4.93%), and Halifax is paying 6.12% (4.9%) for two or three years on its web-based account.
Northern Rock as a fixed rate cash ISA for one year fixed at 6.01% - this is, of course, tax free. It has a minimum investment of £500. There is an upper limit of £3,000 for a cash ISA, and investors can only contribute to a single ISA in the one tax year.
Other ISAs come from Derbyshire, at 6% for two years, minimum £100, and the Halifax with 6% fixed for four years on £3,000. All these ISA examples enable a customer to transfer existing cash ISAs into the new accounts.
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