Top 5 Best Fixed Rate Bonds

1. Introduction to the best fixed rate bonds

You must ask yourself what are fixed rate bonds? They are a type of special savings account which lasts for a set period of time, during which the interest rate as you see from the word “fixed” does not change. The interest rate stays the same even if the Bank of England base rate changes to some other rate.

In today’s market, there has been an explosion of fixed rate bonds in recent weeks or so. Of course, as with all financial instruments not all of them are best buys.

Savers who have and want to deposit some extra savings into fixed rate bonds should read this small guide to find out what are the best fixed rate bonds on today’s market.

But beware, if you withdraw your money before the set period of savings is over, you could face certain penalties of lost interest.


2. Best fixed rate bonds

2. 1. 1 year fixed rate bonds

If you have some cash available (over £500) you could try Metro Bank as they pay 2.1pc on balances above said value. You can open your future account in a branch or online. But customers have to pay the interest into a separate Metro Bank account which means the amount will not be compounded.

2. 1. 2 year fixed rate bonds

If you are interested in 2-year fixed rate bonds you, Aldermore could be your next pick as they pay at the top rate of 2.35pc. Again, accounts can be opened online or in a branch, but the minimum of £1,000 is needed.

On the other hand, you can take a look over at Al Rayan’s. They offer 2.42pc. Although they may pay the highest, there is some risk involved. Moreover, the Sharia-compliant bank said they never failed to deliver.

2. 1. 3 year fixed rate bonds

If you are looking for 3-year fixed rate bonds, you can take a look at RCI Bank and Metro Bank as they have a joint offer of 2.7pc. Furthermore, there are things to be considered with both accounts.

If you choose RCI Bank, you’ll get compound interest, however, savings are not protected by the UK’s statutory Financial Services Compensation Scheme. Don’t grief yet as the deposits are covered by the French equivalent, up to €100,000.

On the other hand, if your bank of choice is the Metro Bank, their 3-year fixed rate bond can be opened with £500 but interest must be paid away.

2. 1. 4 year fixed rate bonds

Would you like a bank that pays 2.75pc? If you like what you are hearing, then your bank of choice could be Charter Savings Bank. The minimum deposit is £1,000 or more. There is a maximum balance which is capped at £250,000. The interest is paid monthly or annually and if you want to their saver, you can apply online.

2. 1. 5 year fixed rate bonds

Secure Trust Bank pays at a top rate of 3.05pc. Again, the minimum deposit required is £1,000. And as with many other banks, interest must be paid into another bank account and only when the bond matures.

3. Conclusion

All in all, as with every other investment on the market, you have to be careful as there is always some risk present. Bonds, although they carry very low risk, they still carry a risk, so be careful where you are putting your money.


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