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How is interest calculated?
The interest rate payable is dependent on the length of time you are prepared to tie up your savings and whether you want monthly or annual interest, the rates of interest are as follows:
| Term | Annual interest | Monthly interest |
| 1 year | 3.41% gross AER | 3.36% gross / 3.41% AER |
| 2 years | 3.96% gross AER | 3.89% gross / 3.96% AER |
| 3 years | 4.21% gross AER | 4.13% gross / 4.21% AER |
Is interest accumulated to my savings?
Annual interest is paid on the anniversary of the account opening.
Monthly interest is paid each month based on the date your account was opened.
In both cases interest can either be paid into your bond or a separate current account.
How long do I have to tie my savings up for?
The length of the deposit term you select.
Can I get access to my savings?
There is an opportunity to access your savings early, however this is subject to a breakage fee, which might mean you get less back than you invested.
How do I manage my account?
The accounts are opened and managed online, you can open an account and find out more information by clicking here.
Technical queries however can be answered by a helpline on 0845 600 5580.
How much can I save?
From between £500 to £2,000,000
How is the interest taxed?
Interest is paid net of basic rate tax, higher rate tax payers will need to pay additional tax.
If you are a non taxpayer you can apply to have the interest paid gross, without the deduction of tax.
What are the advantages of this account?
- The rates of interest are extremely competitive compared to other savings products with similar terms
- The minimum deposit is low at just £500
- Savers can choose whether they want annual or monthly interest, which can be paid to a separate account where required
- The Post Office Online Bond is provided by the Bank of Ireland who are covered by the UK Financial Services Compensation Scheme (FSCS)
What are the disadvantages?
- You should be sure that you can tie up your savings for the term you select; early surrender could mean you get less back than you invested
- The bonds are only available online and a valid email address is required to open them, this may limit access for some people
The Investment Sense Verdict
We like these accounts, the rates of interest are excellent, there is variety of terms to pick from and the accounts can be opened easily online with a low starting balance.
A thumbs up from us.
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.
