HomeHow is interest calculated?
Interest is fixed at 4% gross AER per year.
Is interest accumulated to my savings?
Interest is paid at maturity of the bond
How long do I have to tie my savings up for?
The bond has a fixed term of two years.
Can I get access to my savings?
Yes, however a penalty of 180 days interest will be charged.
How do I manage my account?
According to the Bank of Ireland website the Web Bond is designed to be managed exclusively online, although there is a helpline number if you have questions.
How much can I save?
The minimum amount needed to open an account is £500, once you have made your initial deposit no additional payments can be made into the account.
How is the interest taxed?
The interest is subject to income tax, although non taxpayers can apply to have interest paid gross, without the deduction of tax.
What are the advantages of this account?
- The interest rate of 4% gross AER per year is currently the best 2 year fixed rate bond available (Source: Investment Sense Best Buy Tables )
- The Bank of Ireland Web Bond is currently the only two year fixed rate bond to pay an interest rate of 4% or more
- The account needs a relatively small amount to be opened
- The Bank of Ireland are members of the Financial Services Compensation Scheme
What are the disadvantages?
- The account is not available for those people who do not have online access
- If you need access to your savings during the two year term a substantial penalty is payable
- The interest payable is currently insufficient to keep pace with inflation
The Investment Sense Verdict
Although this account is only available online and the interest rate is insufficient to keep pace with inflation as fixed rate bonds go we believe this is an attractive offering from Bank of Ireland.
The account just creeps over the psychological 4% barrier and is therefore ahead of its’ rival two year fixed rate bonds.
There is a debate at the moment amongst saver whether to fix for a longer period of time and get a higher interest rate in the knowledge that if interest rates rise, those people who have fixed for say four or five years could be left stranded with an uncompetitive account.
The Bank of Ireland Web Bond pays 1% less than the best five year fixed rate bond and only 0.27% below the best four year fixed rate bond. Such a relatively small difference is making the decision between interest rate and flexibility easier for savers, with the shorter termed fixed rate bonds looking more attractive.
Finally for people nervous of Irish banks due to their recent restructuring it should be noted that the Bank of Ireland are part of the UK Financial Services Compensation scheme.
Despite it only being available online, we like this latest offering from Bank of Ireland.
Should you wish to discuss this account, or ways of getting a real, above inflation, return on your savings, speak to one of our team of advisers today. They can be contacted on 0115 933 8433, 0845 078 7774 or by sending an email to info@investmentsense.co.uk.
