Atom Bank launches 2.05% one-year bond, the top rate for 2 years


  • Start-up online bank offering 2.05% one-year rate
  • Best buy deal is the highest short-term fix since April 2016
  • Expert hints better deals could be on the horizon thanks to challenger battle 

Emma Gunn for Thisismoney.co.uk

It’s no news to savers that rates are disappointingly low and have been for a while – but things could be looking up thanks to a resurgence in fixed-rate bonds.

Atom Bank has today raced past the rest of the pack with the launch of a new one-year deal paying 2.05 per cent.

This is the first deal to pay more than two per cent since April 2016 when Union Bank of India UK paid 2.15 per cent, according to figures from information website Moneyfacts.

Market-beating deal: Atom Bank offers 2.05% on its new one-year fixed rate bond

Market-beating deal: Atom Bank offers 2.05% on its new one-year fixed rate bond

Market-beating deal: Atom Bank offers 2.05% on its new one-year fixed rate bond

Savers were able to find returns of two per cent from a one-year account in March 2017, but rates have not exceeded two per cent for more than two years.

The bank requires a deposit of £50 and you can only apply and manage their account via a smartphone app, which may be a snag for some savers.

The digital challenger pays a rate of 2.03 per cent those preferring interest to be paid monthly.

The details 

The next best deal in This is Money’s independent best buy savings tables is Gatehouse Bank which took the top spot just weeks ago with the first two per cent rate in a year.

The bank however offers an expected profit rate rather than guaranteed interest as it is compliant with Sharia law.

Following Gatehouse Bank are OakNorth Bank and Paragon Bank at 1.87 and 1.86 per cent respectively, both require £1,000 to open an account.

Paragon bank offers the next highest rate to Atom Bank for those wanting monthly income from their pot at 1.84 per cent. 

Is it worth opening?

Fixed-rate accounts pay rates a fair bit higher rates than easy-access accounts (see below) as savers must commit their cash for a set period.

However, miserly rates mean the rewards for locking your cash in for a longer term are limited and are an unattractive option for savers holding out for an interest rate rise from the Bank of England.

This makes short term bonds a popular option, and Atom Bank’s account is therefore likely to prove popular with rate-chasing savers.  

Rachel Springall, finance expert at Monefycats, says: ‘There has been a clear resurgence in the short-term bond market in recent weeks with both challenger banks and Islamic banks climbing to the top of the best buy’s by tweaking their rates.

‘Atom Bank has leap-frogged Gatehouse Bank which pay two per cent as an expected profit, by paying 0.05 per cent more – but as we have seen before, there is no guarantee that Atom Bank will pay this top rate forever or that they won’t improve it in the weeks to come.

‘It’s only been around two weeks since Atom Bank upped rates on their bonds and should they desire new funds, they could up the one-year fixed rate again if they lose their table-topping position.’

THIS IS MONEY’S FIVE OF THE BEST SAVINGS DEALS

 

 

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