Santander launches 4% fixed-rate bond

Santander-owned Abbey, Alliance & Leicester, and Bradford & Bingley have launched a new two-year fixed-rate bond paying interest at 4% gross/AER.

The bond is available to new and existing customers, and requires a minimum investment of £10,000.

Customers opening the account can choose to have interest paid when the account matures, or monthly with a slightly reduced interest rate.

The 4% gross interest rate works out at 3.2% net.

Accounts where interest is paid monthly receive a gross interest rate of 3.93%, equivalent to 3.14% net.

Savers cannot access their money until the account matures, and closing the account early incurs a penalty equivalent to 120 days interest.

The account can be opened online or in any local branch of a Santander-owned bank.

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