Despite rumours about the Bank of England base rate starting to rise later this year, we may have to wait a while longer before interest rates on standard accounts get back up to that level.
But what’s this? An18-month bond paying 5.65%? It might sound too good to be true, but this is no trick. This 18-month bond really does pay a monthly return of 5.65% before tax – the only difference is that Wellesley & Co. is a peer-to-peer lender rather than a traditional savings provider.
In other words, it takes money from savers and lends it out directly to borrowers – negating the need for banks and building societies, thus getting a better rate for both parties.
Here, we take a closer look at the deal, its pros and it cons – and ask whether you should take the plunge.
What’s the deal?
The Wellesley & Co. is offering 18-month fixed-rate savings bond which can be opened with as little as £10.
However, the good news for more serious savers keen to take advantage of the 5.65% (or 5.73% annual) rate is that there is no limit on how much you can invest.
The bond is one of a several fixed-rate savings accounts offered by the peer-to-peer lender, ranging from a six-month deal paying an annual return of 3.75% to a five-year bond paying 7.50% annually.
With all of the bonds (with the exception of the six and 12-month options) you can choose to have your interest paid monthly or on maturity.
And in all cases, the capital is repaid on the maturity of the term, while the advertised rates are inclusive of any fees.
Who is it good for?
Even if you’re too young to have been interested in savings accounts before the credit crunch, you cannot have failed to notice other savers’ heartfelt complaints about the low interest-rate environment of the last five years or so.