Tesco has entered the fixed-rate bond market, launching its first new product as a standalone bank.
The supermarket giant bought out the Royal Bank of Scotland's share in its financial services business at the end of 2008 and the bond is part of its plan to expand its presence in the sector.
Consumers will get a 2.95% return on the Tesco Bank one-year fixed-rate bond, with the two-year product offering a rate of 3.5%. Both are slightly below the best buy rates of 3% and 3.6% respectively.
Customers need to pay a minimum of £2,000 into the accounts, which can be opened by telephone, while a maximum of £1 million can be deposited. People can opt to have the interest paid monthly, annually or on maturity, but once they open an account they cannot access their money or close it until the fixed term is up.
Benny Higgins, chief executive of Tesco Bank, said: "The Tesco Bank fixed-rate saver is a great addition to our product range and we look forward to offering customers even more choice as our business develops."
