Fed up with bank rip-offs? It pays off to shop around

For two year investments the best fixed rate bond is from Santander which is paying 3.75% gross.  But minimum investment is a pretty steep £25,000 and the bond is only available in branches or by phone – and they then ask you to come into a branch to do the hard sell.  Coventry Building Society and ICICI Bank both have two year bonds paying 3.7%, Coventry with a minimum investment of just £1 and ICICI Bank £1,000.  Coventry’s bond is available online at www.coventrybuildingsociety.co.uk at a branch, as well as by post and phone.  ICICI’s bond is only available online.  ICICI Bank also has the top paying three year bond offering 4.15% with the same minimum investment of £1,000.

At four years Barnsley Building Society, a new entrant, and Aldermore Bank top the tables, both paying 4.25% on sums of £100 and £1,000 respectively.  It also offers a monthly interest option where the rate works out at 4.17% gross which is useful for those who need income from their deposit accounts.  The Barnsley bond is only available online at www.barnsley-bs.co.uk while you can apply for a bond with Aldermore at www.aldermore.co.uk as well by post or telephone.

There is a new entrant at five years too, Bank of Baroda which is paying 4.9% gross on sums of £500 or more.  This bond is exclusive to Moneysupermarket.com and the bond is covered by the UK Financial Services Compensation Scheme which guarantees deposits up to £50,000 per person.  Full details at www.bankofbaroda.com.  ICICI Bank is not far behind paying 4.75% gross on sums of £1,000 or more.

ISAs

Barnsley Building Society has also launched a new chart topping Fixed Rate Online ISA paying 3.00% fixed until 31/12/11. The product is available to new and existing customers including those who have existing tax-free savings elsewhere and pays over four times more interest than the average cash ISA.

You can open an account online at www.barnsley-bs.co.uk .  Barnsley Building Society, which has eight branches, merged with Yorkshire Building Society on 31st December 2008. 

Northern Rock is also paying 3% tax free on a one year fixed rate ISA on sums of £500 to £5,100 but it won’t accept transfers from other providers and there is 60 days loss of interest if you switch out of the account.  You can open an account by post or at a branch but not online.  Full details at www.northernrock.co.uk.

The best account which will accept transfers from other providers comes from Birmingham Midshires which is paying 4.25% fixed on sums of £500 or more – but you must be prepared to tie up your money for five years which won’t suit everybody.  You can only apply for an account by post – which is not very convenient either.  Details at www.bmsavings.co.uk.