Santander has launched a three-year fixed-rate bond that pays interest in advance, the first product of its kind.
The Upfront Interest bond, which is being marketed with a television advertising campaign fronted by US Open golf champion Rory McIlroy, is available to anyone with a Santander current account, or those savers who open one.
Blazing: Spanish owned bank Santander has launched a three year fixed bond which pays customers interest in advance
The bond can be opened in branches and by phone. The minimum deposit is £10,000 and capital cannot be accessed for three years.
But in a unique twist, interest is paid in full within six weeks of opening the bond. The rate is equivalent to 3.36 per cent gross per year.
For example, someone who deposits £10,000 this week will be paid just over £830 in net interest early next month.
The interest is paid into the Santander current account. No further interest is paid during the term and savers get their capital back in December 2014.
More... Why didn't Santander warn me when I accidentally cashed in my Guaranteed Growth Plan early? Santander suffers as UK arm posts 9% fall in profits‘At a time when we’re all facing increased expenditure, this is an innovative way to make use of your savings,’ says Kevin Mountford of moneysupermarket.com.
‘Higher rates are available elsewhere, but the draw of interest now is appealling.’
Coventry Building Society last week also unveiled details of its latest Poppy bond, which pays 0.05 per cent of balances to the Royal British Legion each year. It pays 3.55 per cent gross fixed until April 2013.