Focus on: NEW market leading one-year bond paying 3.65%

Savers with a large lump sum to invest who have already used this year's ISA allowance may want to consider Cahoot's new one-year fixed rate bond paying a generous 3.65%.

The market-leading bond is available to those with at least �25,000 to invest, but could it be the right account for you? We take a look at the small print...

What's the deal? Cahoot's one-year fixed rate bond pays more than seven times the Bank of England base rate at 3.65% before tax. You can invest a minimum of �25,000 up to a maximum �2million in the account, but bear in mind that if you are planning to make a large deposit, only the first �85,000 is protected by the Financial Services Compensation Scheme. Savers cannot make any withdrawals or pay in any more money once they have opened their accounts. Interest will be paid on June 1 next year when the bond matures, and savers will be able to get immediate access to their money then, as it will be paid into an instant access account. Any catches? The steep minimum investment limit on this account will exclude smaller savers, although there are alternative accounts available which also pay competitive rates of interest and require a lower minimum deposit. For example, Allied Irish Bank's one-year bond pays 3.40% on a minimum investment of �1,000, while United National Bank's one-year fixed term deposit account pays 3.30% on a minimum investment of �2,000. If you have even less than this to invest, then the Virgin one-year bond pays 2.90% and can be opened with a minimum investment of just �1. Another disadvantage of the Cahoot bond is that, in common with most other fixed rate accounts, you cannot make any withdrawals or additional deposits once you have opened the account, so you must be prepared to tie up your money for the full one-year term. Verdict If you have already used your ISA allowance and have money set aside for next year's ISA too, and you have a further �25,000 to invest, then this bond is an excellent choice. The rate is market-leading, and highly competitive considering that the Bank of England base rate is still languishing down at 0.50%. Make sure you pay in the maximum you can afford at the outset, as you won't subsequently be allowed to top up the account. Top tip Shorter term fixed rate bonds are a good option for savers as they generally pay higher rates of interest than most easy access accounts. However, be wary of tying your money up for too long, as while rates look competitive now, they may not seem quite as appealing once interest rates start to rise.

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