Banks introduce stepped savings interest rate bonds
As UK base rates look set to continue to remain relatively low in the short to medium term a number of banks have stepped forward with stepped savings interest rate bonds. In effect these bonds will offer a guaranteed interest rate in year one which will step up in year two, year three, year four and year five. However, experts have warned investors to check out the quality of the providers as well as the terms and conditions associated with these bonds.
It is debatable as to whether UK base rates will remain relatively low for another five years with some expecting a potential double dip recession and then a significant bounce to anywhere up to 8% over the next two to three years. If this is the case then a stepped savings bond may not be the best way forward because ultimately savers could be locked into unattractive rates from year two onwards.
Many investors in the UK seem to be blinded by the short term attractions of various investment tools and savings instruments when in fact they should look towards the longer picture and the overall value to them. No financial institution in the UK will "give away" interest or returns which it does not feel offer a benefit to itself as well as customers.
Share this..
Related stories
Is it time to pump your savings into the UK property market?
While the UK property market is struggling to pull away from the credit crunch and recession it can be difficult to look longer term in relation to UK property prices. While prices are unlikely to push ahead in the short to medium term, due to increased taxes, a reduced public sector budget and difficulties overseas, is there still potential for long-term capital growth in the property sector?...
Read MoreShould savers lose out in the event of a banking collapse?
There have been a number of interesting propositions and comments regarding the future of banking regulations in the UK although one yesterday from the Institute of International Finance has caught the eye of many people in the UK. Should savers lose any rights to protection in the event of a banking collapse? While in the UK there is compensation system in the event of a banking collapse this...
Read MoreBudget Headlines : Extra £9 billion of efficiency savings by 2013/14
Extra £9 billion of efficiency savings by 2013/14...
Read MoreHalf of Brits do not earn enough to save
Half of Brits say they need to earn a bigger salary to be able to afford to save, according to research conducted by Birmingham Midshires The building society found that £21,888 is the salary needed to able to afford to save, and those questioned said they would need to earn an average monthly salary of £1,824 to be able to find extra cash to put aside. However, a third of those polled reckone...
Read MoreHow can you make your savings work for you?
Over the last few weeks there has been a significant increase in the number of people in the UK who are paying off their debts as opposed to building up further problems for the future. Many people seem to be happy to use their savings to reduce their debts but is this really a sensible course of action? The truth is that savings rates in the UK are at best around 2%, unless you are prepared to...
Read More