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Fixed rate bonds inbetweeners

Fixed rate bonds inbetweeners

Category: Savings

Updated: 05/07/2013
First Published: 03/07/2013

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Medium-term fixed-rate bonds are a popular choice amongst savers, as they tend to pay higher rates than their short-term counterparts without committment of a four or five-year investment product.

Many cautious savers are favouring two and three-year bonds, as they allow money to be locked away whilst minimising the risk of being left on lower rates in the event of interest rates eventually rising.

Here is a summary of the current top 5 medium-term fixed rate bonds:

AER Details
  • Monthly interest paid at 2.52%
  • Minimum investment of £1,000
  • Further additions and early access not allowed
  • Account can be operated online only
  • HiSAVE Savings account must be automatically opened for administration of maturity proceeds

Penny says: "Sitting at the top of the medium-term market is this highly competitive deal available to savers with at least £1,000 to invest.

"Access to funds during the term is prohibited, so savers must be willing to tie up their cash for the duration of the three year term."

AER Details
2.25% paid for investments between £1 and £9,999, 2.35% between £10,000 and £24,999, 2.45% between £25,000 and £49,999 and 2.55% for deposits between £50,000 and £10 million
  • Monthly interest of 2.23% paid for investments between £1 and £9,999, 2.32% between £10,000 and £24,999, 2.42% between £25,000 and £49,999, 2.52% between £50,000 and £10 million
  • Investments range between £1 and £10 million
  • Further additions not permitted
  • Early access allowed, subject to loss of interest depending on the remaining term: One year or less; 90 days' loss, up to two years; 180 days' loss, up to three years remaining; 270 days' loss
  • Account can be operated by post only

Penny says: "Paying a variety of rates, depending on the deposit amount, this account should appeal to savers with larger investments.

"Although this account can only be operated by post, savers can apply by telephone or online."

AER Details
  • Investments range between £1,000 and £1 million
  • Further additions and early access not permitted
  • Account can be operated in branch, by post, by telephone or online

Penny says: "Sitting in third place is this three-year account from the Bank of Cyprus UK, available to savers of all ages.

"Savers must be committed to locking their money away for the three year term as early access to funds is prohibited."

AER Details
  • Monthly interest rate of 2.32% paid
  • Investments range between £10,000 and £5 million
  • Further additions and early access not permitted
  • Account can be operated in branch or by post
  • Savers must hold or open a State Bank of India savings or current account

Penny says: "Falling just shy of the market's top three is this attractive deal paying competitive returns on its anniversary and a monthly basis.

"Withdrawal of funds during the term is not permitted as with the majority of fixed rate bonds."

AER Details
  • Investments range between £5,000 and £2 million
  • Further additions allowed whilst issue remains open
  • Early access not permitted
  • Account can be operated by post or telephone

Penny says: "This deal from Shawbrook Bank squeezes into the top five of the market with a competitive annual rate of return.

"Savers can apply for this account by post or via the internet if they wish."

What Next?

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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