What if you could get a year’s worth of interest from your savings the second you put your money into it? Well, with a new Lloyds Bank Upfront savings bond you can
Saving is meant to be a waiting game, with you patiently sitting by as the rewards for your planning bear fruit. But it turns out it doesn’t have to be.
A new account from Lloyds Bank is offering to pay people a full year’s interest in the first month — offering a real possibility of a quick cash boost straight away. You could even take that interest and put it in an instant-access account to earn even more money the traditional way.
So how does it all work and what are the catches? We take a look:
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What is the Lloyds Upfront savings bond?
The Lloyds Upfront Interest 1 Year Online Fixed Bond — to give it its full name — is a savings account that currently offers 4% AER interest on savings of between £500 and £9 million.
If you have a Lloyds Premier Current Account, Private Banking Personal Current Account or Private Banking Savings Account that’s been open for at least eight days, that rate rises to 4.2%.
Crucially, the interest from the money you put into the account is paid into a bank account of your choice within a month of you depositing the money. That’s the full year’s interest more or less straight away.
You need to keep your money in the account for 12 months.
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- Offerup to £300 in free shares*
- Annual fee£0
- Trading fee£0
- Minimum deposit£0
- FSCS Protected? Yes
- Transfer in existing ISA? Yes
- Interest on uninvested cash 3.75%
- Fractional shares No
- Flexible ISA Yes
- Foreign exchange fee 0.70%
- Fund fees If you invest in funds, you'll have to pay fund fees depending on the funds you choose
- Authorised and regulated by the Financial Conduct Authority Yes: FRN 944492
- Risk warning Capital at risk. The value of investments can go down as well as up.
- Offer Invest a minimum of £300 and get up to £300 in free shares. T&Cs apply. Other fees may apply.
How does the Lloyds Upfront savings bond work?
This is what you need to do to get the interest paid up front:
- Open the account – in the app or online if you are an existing Lloyds’ Bank customer, or apply online if you are a new customer
- Select ‘Upfront Interest’ during account opening
- Nominate the bank account you want the interest paid into
- Deposit between £500 and £9 million in the next 10 days
- After 10 days you can’t put any more money into it
- Your money is locked in — with no early withdrawals or closures for 12 months
- Within 20 days of opening the account, the full year’s interest is paid into the bank account you nominated
- After 12 months the account becomes a Standard Saver (which pays 0.75% AER on balances of up to £25,000)
Once the interest is paid, you can do whatever you like with it. Spend it, save it into another account or whatever you like.
How much can you earn with the Lloyds’ Upfront savings bond?
Here’s a quick breakdown showing what interest you’ll be paid based on how much you save into the account:
| Amount you deposit | Fixed interest rate | Interest you’ll receive up front |
| £1,000 | 4% AER | £40 |
| £5,000 | 4% AER | £200 |
| £10,000 | 4% AER | £400 |
| £20,000 | 4% AER | £800 |
| £50,000 | 4% AER | £2,000 |
How does the Lloyd Upfront savings bond compare with a traditional account?
A traditional fixed-rate savings account promises to keep paying its headline interest rate for the full term — be that 6 months, a year, or as long as 5 years.
Interest is paid monthly, quarterly, annually or at maturity — depending on the account you choose.
Some allow early access to your money — albeit normally at the cost of some of the interest you’ve built up — others lock it away securely for the full term.
Of course, there are also easy-access accounts that let you add or remove money whenever you like. However, these almost always pay a variable rate of interest.
That means your interest rate can rise and fall at the bank’s discretion while your money is saved in them.
The new Lloyds’ Bank Upfront bond is the only fixed-rate account from a major provider to pay interest up front, although it has been tried out before. Back in 2011 Santander launched a three-year fixed-rate bond that paid money up front, although you needed a Santander current account to open one.
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How does the interest on the Lloyds Upfront bond compare with other accounts?
The problem with the Lloyds Upfront savings bond is that it doesn’t pay very well compared to the top accounts on the market.
The best-paying one-year fixed-rate bond at the moment pays more than 5% interest, compared to Lloyds Bank Upfront’s 4%. In fact, the top 10 best-paying all pay more than 5%.
It’s even beaten by the best-paying instant-access accounts, which are paying as much as 5% on small amounts and more than 4.5% on balances of up to £500,000.
Even if you save the interest Lloyds Upfront pays you in the first month, you don’t bridge that gap.
After all, getting 5% growth on 4% of your money (what Lloyds pays) only works out as an effective interest rate of 4.2% overall — still well below the market leaders.
It’s also not an ISA, which means there is the potential to pay income tax on the interest you earn.
The best Easy Access Cash ISA savings accounts
Check out our list of the highest paying easy access Cash ISAs
Is it worth getting the Lloyds Upfront Interest one year online fixed-rate bond?
The key feature of the account is it lets you turn savings into extra cash fast.
If you have money in a low-paying or no-paying savings account that you can move quickly, it could net you a decent amount of money more or less straight away.
This could be very useful for paying a bill, clearing some debt or just on a treat you want now — rather than waiting — all the while the savings balance you move is protected.
But you are sacrificing access to that cash for 12 months, with no withdrawal options at all, in exchange for getting the interest up front.
Potentially worse, if you’re prepared to wait 12 months anyway you could earn a significant amount more with any of the top-10 best-paying savings bonds at the moment.
You could also earn more and not lose access to your cash with an easy-access savings account — although those rates aren’t guaranteed.
Overall, it’s an interesting product that could be perfect for people in specific situations — but unless you’re one of them you could make more money with a different account.
The best fixed savings accounts
Check out our list of the highest paying fixed rate savings accounts.
