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One-year fixed term investment bond pays 2.00%

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Written by: Paloma Kubiak
17/03/2017
Castle Trust is offering attractive rates on it four investment Fortress Bonds. Here’s what you need to know.

Castle Trust is offering favourable rates on its Fortress Bond,s which are fixed term fixed rate investments between one and five years that differ from traditional savings accounts.

As they’re investment based products your money is protected in a different way (see below for more).

The bonds are issued in monthly tranches with interest payable quarterly or at maturity. The rates are as follows:

  • One-year bond: 2.00% (best buy alternative is from United Trust Bank paying 1.65%)
  • Two-year bond: 2.10% (best buy alternative is from United Trust Bank paying 1.80%)
  • Three-year bond: 2.20% (best buy alternative is from Atom Bank paying 1.90%)
  • Five-year bond: 2.50% (best buy alternative is from Milestone Savings paying an expected rate of 2.30%).

The deadline to apply for the Fortress Bonds is 2pm on Friday 31 March and the minimum investment is £1,000, while the maximum is £250,000. An important point to note is that there is no early access to your money before maturity – unless the account holder dies.

All four versions of the Fortress Bond are eligible to be held within an ISA wrapper, though Castle Trust confirmed it pays the same rates irrespective of whether the bond is held within an ISA or not.

How is your money protected?

The Fortress Bonds are covered by the investment branch of the Financial Services Compensation Scheme (FSCS), not the deposit branch. This means that investors are covered up to a maximum amount of £50,000 under the FSCS.

Castle Trust is regulated by the FCA but it includes this disclaimer on site: ‘You risk losing capital should Castle Trust become insolvent’, which relates to any amount not covered by the FSCS.

Rachel Springall, finance expert at Moneyfacts, said: “The Castle Trust Fortress Bonds could be an alternative for savers looking for high interest but it is worth mentioning that they do not work the same way as a traditional savings account.

“These are investments whereby savers effectively lend their money to the company in return for an interest rate on that loan. This means that their capital could be at risk if Castle Trust runs into difficulties, such as if they become insolvent.

“With this in mind, it’s vital that savers make themselves aware of the risks, particularly as there is no early encashment allowed. Those concerned may prefer to opt for a more traditional savings account as a safe haven for their cash.”

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