The last few weeks have seen various providers drop out of the best buy tables, taking themselves out of the running, with the 1 year fixed rate bond table particularly affected. However, there are several providers that have bucked this trend in the last week or so, improving the rates they have on offer.
Milestone Savings and State Bank of India have both made improvements to fixed term deposits and in a surprising move, not only has Virgin Money improved the rate on offer on its variable rate ISA, but this change has also benefitted those already holding the account, in a clear contrast to the many rate cuts that continue to affect existing account holders.
Milestone Savings has increased the expected profit rate on its Sharia Compliant 5 Year Fixed Term Deposit from 3.00% to 3.20% gross/AER. Accounts can be opened online with a minimum of £10,000 and you cannot access funds within the term.
Whilst the expected profit rate is market leading, the account differs from standard fixed rate bonds in that it is Sharia compliant and therefore generates a return based on profit rather than a guaranteed rate of interest. As the return is linked to the performance of the provider and the investments it makes, there is an element of risk attached to this type of account. Whilst this may be of concern to some, as long as you are fully aware of how the profit is generated and paid and have researched how Sharia compliant accounts differ from standard accounts, they could be considered as an alternative to a standard fixed rate bond.
State Bank of India has increased the rates on selected fixed rate bonds for new accounts opened, two of which now appear in our Fixed Rate Bond Best Buy Tables. The 2 year bond pays 2.20% gross/AER (the previous version paid 2.00%) and the 5 year bond pays 3.00% gross/AER (the previous version paid 2.90%). Accounts can be opened with a minimum of £10,000 in branch or by post or alternatively an online version of the 5 year bond is available at the same rate.
With many providers dropping out of the best buy tables, it is good to see a provider bucking the trend.
Virgin Money has increased the interest rate on its Defined Access ISA / E-ISA Issue 4 from 1.41% to 1.51% tax free/AER for both new and existing account holders. Accounts can be opened in branch or post or online for the E-ISA, with a minimum of £1. The interest rate falls to 0.75% if four or more withdrawals are made in a calendar year. As a result of this change the provider leapt from outside the top five to second place in our Variable Rate ISA Best Buy Table.
Existing account holders will also benefit from this rate increase, which is all too rare in today’s savings landscape, where we continue to see providers cut rates for existing account holders. So, a welcome move and one that we can but hope others will follow.