Scottish Building Society has launched a new fixed-rate savings account with a 4.91% interest rate, described as a "hefty" return. The 2-Year Fixed Rate Bond was announced on Thursday, August 20, and is now available to savers.
Two account options available
There are two versions of the bond depending on how the account is opened. The Fixed Rate Bond 251 (TB291) is available through the building society's Relationship Centres and by Post. The Online Fixed Rate Bond 251 (OTB291) is available online and via the Scottish Building Society app. Both offer a rate of 4.91% with an end date of September 26, 2028.
Expert analysis on the rate
Adam French, Head of Consumer Finance at Moneyfactscompare.co.uk, said the new offering provides a "substantially higher return than the 4.33% average currently offered by a new two-year bond". Fixed-rate bonds require savers to keep funds deposited over an extended period in return for better savings growth than easy access alternatives, meaning savers need enough surplus cash to put aside.
Mr French noted that for those with the means to do so, the new Scottish BS fixed-rate offering "could secure a materially positive return even if inflation rises as the Bank of England expects, potentially peaking around 3.2% to 3.5%". He added that as with most fixed-rate bonds, there is no early access, but "further deposits can be made for 14 days after opening".
Tax implications for savers
Mr French called on savers to keep the tax implications associated with fixed-rate savings accounts in mind. "Interest earned above the Personal Savings Allowance (£1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers) is taxable, and from next April the rates applied to this taxable interest are due to rise by two percentage points, from 20% to 22% for basic-rate taxpayers and 40% to 42% for higher-rate taxpayers," he explained.
"So, while 4.91% looks super attractive, savers need to give some thought to how much of that headline return they will actually keep after inflation and tax." More information is available on the Scottish Building Society website.
