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www.InvestmentGuide.co.uk Other Bank and Building Society Accounts
BANK and BUILDING SOCIETY
(Aso called Stepped Income, Escalating Term Share, Step Up Bond)
Lump sum invested for a term of 3, 4 or 5 years with the interest rate fixed at the outset at rates which rise at yearly (or sometimes 6 monthly intervals). No additions allowed. Withdrawals can sometimes be made, usually at 3 months' notice and losing 3 months' interest; some accounts are less restrictive.
Who can invest Anyone.
How worthwhile It may be difficult to compare one with another because each society or bank may offer different rates in different years. Non-taxpayers compare with National Savings Capital Bond, Co-operative Society Term Account (some offer Escalator Bonds). Some offshore banks also offer Escalator Bonds. Higher rate taxpayers consider instead National Savings Fixed Issue Certificates which work in a similar way but are tax exempt. Also everyone compare with Bank or Building Society Term Account (with a fixed rate).
Minimum Usually £1,000, £2,000, £3,000 or £5,000.
Maximum Usually none.
Suitable Lump sums.
Money back At end of term or earlier usually at 3 months' notice and 3 months' loss of interest. If you die, investment plus full interest up to date is paid out.
Interest Usually fixed for the term.
Interest paid Usually yearly on anniversary. Royal Bank of Scotland on 18 May, Bank of Scotland on 27 May, Halifax on 31 May. By cheque, direct to you, to a bank account, into another account. The bank usually insists interest is paid to you each year so money can't usually be left to accumulate. Monthly: into bank or other account see Bank and Buildlng Society Monthly Income Account.
Tax 20% tax has been deducted from the interest. Non-taxpayers can reclaim the tax from the Inland Revenue (or have interest paid with no deduction). Higher rate taxpayers have to pay extra tax; basic rate taxpayers don't.
Fees to pay None.
Passbook Or certificate issued.
Children Unsuitable.
Risk 90% compensation scheme on the first £20,000 (100% on first £2,000, 90% on the next £33,000 from 1 December 2001) for each investor in each bank or building society licensed by the Financial Services Authority.
How to invest Consult the list published in Money£acts each month.
Where from Abbey National, Bristol & West, Halifax,Norwich & Peterborough, Royal Bank of Scotland. Other building societies and banks make offers from time to time.
Other Bank and
Building Society Accounts
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Last updated 10 September 2001