Better deals on bonds

By DAILY MAIL REPORTER
Updated: 19:00 EST, 2 February 2000

The new issue of National Savings Pensioners' Bonds pay a fixed monthly income of 6.2% before tax (4.96% after 20% tax) for two years, or 6% (4.8%) for five years on a minimum £500. The bonds are open to anyone aged 60 or over. Monthly income seekers can earn a higher 6.95% (5.56%) on a minimum £1,000 with Northern Rock or 6.78% (5.42%) for £500-plus with Woolwich, both fixed for two years.

The latest issue National Savings Fixed Rate Savings Certificates pay 4.75% for savers willing to tie up between £100 and £10,000 for two years. They offer a good deal to 40% taxpayers as there is no tax to pay on the bonds. The rate is the equivalent to earning 7.92% a year before tax with a bank or building society. The £10,000 limit applies to new money going into Savings Certificates. Investors can also reinvest any money maturing in existing Certificates on top. National Savings will raise the rate it pays on its variable rate Income Bonds from March 9.

Savers with between £500 and £25,000 will see their monthly income rate rise by 0.3% to 5.75% before tax (worth 4.6% after 20% savings tax). At £25,000, the rate rises to 6% (4.8%). The rise puts it among the best payers for monthly income seekers not wanting to tie their investment up in a fixed rate bond.

Rates on the Investment Account go up between 0.25 and 0.3%. Rates start at 4.1% ( 3.28%) but you need to give one month's notice to take money out of the account.