The Union Bank of India has increased the interest rate on its One Year Fixed Rate Deposit account to 5.12%, earning an "excellent" rating from Moneyfactscompare.co.uk. A saver depositing £1,000 would earn £51 in interest over 12 months.
Account details and restrictions
Customers can deposit between £1,000 and £1 million into the bond, but are only permitted to invest once. Withdrawals are not allowed during the one-year term, so Caitlyn Eastell, personal finance analyst at Moneyfactscompare.co.uk, advised savers to consider this level of access carefully before committing.
Eastell said: "The one-year option fares best and now pays a market-leading 5.12%. However, as is the case with many fixed rate bonds, earlier access is not permitted, so savers should ensure they’re willing to lock away their cash for the full term and have some sitting in a separate flexible account for backup. The initial investment should also be carefully considered as further additions are not permitted."
Bonus for loyal customers
If customers reinvest their funds into another bond when the account matures, they could earn a small 0.1% bonus, which Eastell described as an attractive option. She said: "Adding to its appeal, loyal Fixed Rate Deposit customers could benefit from a small 0.10% bonus if they choose to reinvest into another bond at maturity, which may be a plus for some. Overall, the account receives an Excellent Moneyfacts product rating."
How other accounts compare
Close Brothers Savings and AlRayan Bank both offer one-year bonds at the same 5.12% interest rate, but require a much higher minimum opening deposit of £10,000. For a lower initial deposit, this bank offers a rate of 5.10% on its Fixed-Term Savings Account, which can be opened with just £100. Vanquis Bank has a 1 Year Fixed Rate Bond paying 5.08% interest, requiring a £1,000 minimum deposit.
