Update 12 April 2013 – The rate of interest on the 123 customer exclusive Santander 18 Month Fixed Rate Bond has now dropped to 1.85%. This illustrates the current downward trend in interest rates on savings accounts.

Santander is offering an interest rate of 2.5% on their 18 Month Fixed Rate Bond. However, this bond is only available to customers who hold a Santander 123 Cashback Current Account or a Santander 123 Credit Card.  The minimum deposit in £500.

The rate of interest on the Santander 18 Month Bond is competitive. The highest rate I could find for a one year fixed rate bond was 2.25% with Virgin Money. The highest two year bond was 2.65% with First Save or Virgin Money.

Therefore if an 18 month deposit period fits in with your financial plans, you’ve already used you tax free Cash ISA annual limit and you have either of the qualifying Santander products, the Santander 18 Month Fixed Rate Bond appears to a reasonable option for your savings, giving the paltry interest rates available at present.

Rates of interest correct on 4 February 2013.

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