The Union Bank of India UK has reduced the interest rate on its one-year fixed savings account to 4.33%, while managing to maintain one of the “market-leading” positions. The interest rate, which is paid on maturity, has earned the account an “excellent” rating from Moneyfactscompare.
Savers can open the One Year Fixed Rate Deposit with a minimum of £1,000, and save up to a maximum of £1million. However, as with most fixed-rate accounts, withdrawals and further deposits are not permitted throughout the term. These accounts are best suited to savers who can afford to leave their money untouched and want guaranteed returns. Caitlyn Eastell, spokesperson at Moneyfactscompare.co.uk, highlighted that savers “must be comfortable with their investments”.
Commenting on the deal, she said: “Union Bank of India (UK) Ltd has reduced the rate on its One Year Fixed Rate Deposit. The account now pays 4.33%; however, it maintains its market-leading position when compared to its peers.”
For savers who can pay a bit extra, Ms Eastell pointed out: “There is a ‘Premier’ Bond which requires a minimum investment of £5,000 and pays 4.33%. Overall, the account receives an Excellent Moneyfacts product rating.”
Based on the current interest rate, a £1,000 deposit in the one-year fixed term account would earn £43 in interest, totalling £1,043. For savers who have a £10,000 deposit, their account would reach £10,433 over the year.
It is important to note that the account is not tax-exempt, like an ISA, so savers are responsible for paying any tax on the interest they earn if it exceeds their Personal Savings Allowance (PSA) threshold.
Savers must be aged 18 to launch the account, and all deposits up to £85,000 are protected under the Financial Services Compensation Scheme (FSCS).
Applicants can open and manage the account by post or in a branch, although it cannot be opened online. Instead, a notice of maturity will be sent two weeks before the account matures.
Existing Fixed Rate Deposit holders can earn a 0.10% loyalty bonus if they choose to reinvest into another Fixed Rate Deposit at maturity.
What else is out there?
Chetwood Bank is offering a competitive 4.26% AER interest rate for its One Year Fixed Rate Savings account. Interest is paid on maturity, and savers need a minimum deposit of £1,000 to launch the account. Withdrawals are not permitted until the account matures.
For those with smaller sums to deposit, OakNorth Bank also offers a 4.26% AER on its One Year Fixed Rate Saver on a minimum of £1. Up to £500,000 can be saved overall, and interest is paid on maturity. Withdrawals are also not permitted until the account matures.
