Alliance and Leicester has launched a new one-year fixed rate savings account, featuring a Legal and General investment bond.

The company states that the product is aimed at investors looking for short-term security, with long-term growth potential.

An annual rate of seven per cent gross with no risk to capital is offered to potential investors, while Alliance and Leicester states that customers can rest assured their savings will grow to a guaranteed sum.

Alliance and Leicester Plus customers will also receive an extra one per cent interest on their savings. The Legal and General investment bond aims to provide larger returns than a typical account in the medium to long-term, state the company, but the capital is not guaranteed.

Lindsey Henson, product manager for investments at Alliance and Leicester, said: This plan is ideal as it balances the need for a safe haven for short-term savings, while giving the opportunity to invest over the longer term for potentially higher returns than from a typical deposit account.

The balanced savings and investment plan suits those who are looking to make their money work harder, but still like the security of keeping some of their money in cash.

Yorkshire Building Society recently set the June interest rate at five per cent on its rollover investment bond, guaranteeing that the rate will be available to any saver who wishes to open a bond.