Santander outlined plans to “turn the savings market on its head”, by launching a new savings bond which pays customers’ interest up front.
The Upfront Interest Bond, which pays three years interest in advance, claims to be the first savings bond of its kind in the UK.
The bond was made available this week and will see customers receive £1,000 net interest up front for every £12,000 they save.
Customers must deposit at least £10,000 for a three-year term for the bond, which offers a fixed rate of 3.36 per cent gross AER.
Matt Hall, head of savings at Santander, said: “We have approached our innovative new savings bond from a completely fresh angle.”
Interest is paid into a Santander current account within six weeks of the account opening.
Customers who do not already have a Santander current account must have one opened.
The term of the bond for those opening an account up to November 20 starts on December 1 and matures on December 1, 2014. Interest is not earned before the term starts and no withdrawals can be made during the term.
Santander’s other recent initiatives include a £300 cash back incentive to people who switch their current account.