Grow your savings with NatWest bank bond investments

Savings account interest rates are in the doldrums. Instant access usually spells meagre interest. If you don't need to get your hands on your cash for a couple of years, NatWest bank bond investments may make sense.

NatWest (natwest.co.uk) offers a range of fixed rate bonds that have the advantage of telling you upfront what return your savings will make, unlike the variable rates on some easy access savings accounts.

If you think that interest rates will be going up by the end of 2012, a one year fixed rate bond makes sense. The NatWest one year bond pays 3.20% annually or 3.15% if you prefer interest to be paid monthly.

Longer term bonds pay better interest, but you run the risk of being locked into a poor rate if interest rates start to go up in a year or 2. Presently NatWest's rate for 2-year bonds is 3.75%.

They offer an interesting variation on a 3 year bond, with interest rates starting at 3% for the first year, going up to 4% for the second year and 5% for the third year. This encourages customers to stay with the bank for the course of the bond.

During the bond period, no partial withdrawals or additional deposits are permitted. If you close the account early there will be an interest charge equivalent to 90 days gross interest for a 1 year bond, 180 days for a 2 year bond and 270 days gross interest for a 3 year bond.

To see how the NatWest bonds compare to other bank investments, use a comparison website like moneysupermarket.com or comparethemarket.com.

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