Vanquis Bank increases interest rates on top fixed rate savings accounts

It's the best buy for a five-year fixed rate.

Updated: 

Vanquis Bank has increased the interest rates on three of its High Yield fixed rate savings bonds.

The challenger bank's changes mean it's now the clear best buy for a five-year fixed rate.

Vanquis Bank has increased the interest rates on three of its High Yield fixed rate savings bonds.

The three-year version now pays 2.50%, the four-year 2.91% and the five-year 3.25%. The four- and five-year versions are now clear best buys for their respective terms if you have less than £50,000 saved.

You can choose to have your interest paid monthly or annually. The minimum amount you need to open one of these accounts is £1,000.

You need to run your account online.

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Who is Vanquis?

Vanquis Bank was formed in 2002 by the Provident Financial Group as a credit card provider. In 2011, it launched the first of its High Yield accounts.

The longer-term High Yield accounts have consistently been among the best buys ever since.

How the accounts compare

Here's how the Vanquis accounts now look compared to the rest of the fixed rate accounts out there.

We'll start by looking at how the three-year bonds are shaping up.

Account

Interest rate (AER)

Minimum deposit

Account access

Bank of London and the Middle East Premier Deposit Account

3.00%*^

£50,000

Online

Aldermore Bank Fixed Rate Account

2.70%

£1,000

Online, post, phone

ICICI Bank HiSAVE Fixed Rate Account

2.50%

£1,000

Online, phone

Axis Bank UK Fixed Deposit Account

2.65%

£50,000

Post, branch

Shawbrook Bank Fixed Rate Bond

2.55%

£5,000

Online, post

Vanquis Bank High Yield

2.50%

£1,000

Online

Bank of Cyprus UK Bond

2.50%

£1,000

Online, branch, post, phone



*Anticipated Profit Rate
^Lower interest rates available for smaller deposits

And here are the best buys over four years.

Account

AER

Minimum deposit

Account access

Bank of London and the Middle East Fixed Term Deposit

3.25%

£50,000*^

Online

Vanquis Bank High Yield2.91%£1,000Online

Aldermore Bank Fixed Rate Account

2.90%

£1,000

Online, post, phone

Shawbrook Bank Fixed Rate Bond

2.85%

£5,000

Online, post


*Anticipated Profit Rate
^Lower interest rates available for smaller deposits

And five years.

Account

AER

Minimum deposit

Account access

Bank of London and the Middle East Fixed Term Deposit

3.50%*^

£50,000

Online

Vanquis Bank High Yield

3.25%

£1,000

Online

Aldermore Bank Fixed Rate Account

3.10%

£1,000

Online, post, phone

Shawbrook Bank Fixed Rate Bond

3.10%

£5,000

Online, post, phone

FirstSave Fixed Rate Bond

3.08%

£1,000

Online


*Anticipated Profit Rate
^Lower interest rates available for smaller deposits

Other options

Obviously locking your savings away for four years or more means you run the risk of better accounts being launched during that time. But if you need some income now, particularly if you're a non-taxpayer, it might be worth taking that chance.

Don't forget that several current accounts are paying decent interest rates, and you have instant access to your money too. And there's your tax-free Cash ISA allowance, now boosted to £15,000.

If you're happy for some more risk for a better return, you could also lend your money to other people via a peer-to-peer website. Just be aware that these aren't protected by the Financial Services
Compensation Scheme, which protects up to £85,000 of savings in the event that a financial provider
goes bust.

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