14 brilliant long-term savings bonds

Category: Savings
Date: 8/24/2011

Let's be honest, savings rates aren't great at the moment. But then again, they've not been great for some time now – 30 months to be precise. That's when the Bank of England brought Base Rate to its unprecedented low of 0.50%, in March 2009.

For savers this is troubling. Do you wait and see if rates rise, finding a good easy access savings account or 1 year savings bond? Or do you commit longer term?

If you rely on your savings for income, it's hardly ideal to wait and see, as the highest savings rates are on longer term fixed rate savings bonds. On the flipside, the downside with bonds is that your money is committed for a long term. You may not be allowed access – leaving you stuck if rates go up during the term (or if you can get access you will normally have to forfeit a large amount of interest).

Having said all of that, long term savings bonds remain popular for many savers. So, without further ado, let's look at some of the best accounts available…

5 year fixed savings bonds

Product	AER	Details
5 Year Fixed Rate	4.65%	Monthly interest option available
		Over 50s only
		Minimum investment £1
		Early access allowed subject to interest penalty of up to 365 days
5 Year Fixed Rate Savings	4.60%	Minimum investment £1
		Early access allowed subject to interest penalty of up to 365 days
5 Year Fixed Term Deposit Issue 2	4.60%	Minimum investment £5,000
		No access allowed until end of term
5 Year Fixed Rate Bond	4.50%	Monthly income option available
		Minimum investment £1
		Early access allowed subject to interest penalty of up to 365 days

4 year fixed savings bonds

Product	AER	Details
4 Year Fixed Rate Bond - Series 4	4.40%
		Minimum investment £1,000
		No access allowed until end of term
4 Year Fixed Rate Account	4.25%	Monthly income option available
		Minimum investment £1,000
		No access allowed until end of term
4 Year Internet Fixed Rate	4.20%	Monthly income option available
		Minimum investment £1
		Early access allowed subject to interest penalty of up to 320 days
Hi Return Fixed Deposit	4.20%	Monthly income option available
		Minimum investment £1,000
		No access allowed until end of term

Don't forget your ISA allowance!
Even if you need to take the interest you earn as income, don't forget cash ISAs. You can get fixed rate cash ISAs, just like you can get fixed savings bonds – for terms of up to 5 years. Because you pay no tax on the interest, you can earn more from your savings.

You can invest up to £5,340 in the 2011-12 tax year and most bonds will allow you to transfer your existing ISA pot as well.

The best longer term fixed rate ISAs

Make sure you note the equivalent interest rates you'd need to earn on a non-ISA savings account – in some cases you might need to find an account paying 3% higher!

Product	AER	Equivalent gross savings rate needed from a non - ISA account		Details
Best Fixed Cash ISAs
		Basic Rate Taxpayer	Higher Rate Taxpayer
Cash ISA Fixed Rate Bond Issue 11	4.50%	5.63%	7.50%	Fixed until 29.4.16
				ISA transfers in allowed
				Up to 180 days' loss of interest for transferring out or closure
Fixed Rate ISA Saver	4.30%	5.38%	7.17%	Fixed for 4 years
				ISA transfers in allowed
				180 days' loss of interest for transferring out or closure
Fixed Rate ISA Saver	4.25%	5.32%	7.09%	Fixed for 5 years
				ISA transfers in allowed
				Up to 365 days' loss of interest for transferring out or closure
Best Monthly Interest Fixed Cash ISAs
5 Year Fixed Rate ISA	4.25%	5.32%	7.09%	Fixed for 5 years
				ISA transfers in allowed
				Up to 365 days' loss of interest for transferring out or closure
Online 5 Year Fixed Rate Cash ISA	4.00%	5.00%	6.67%	Fixed until 15.8.16
				ISA transfers in allowed
				240 days' loss of interest for transferring out or closure
3 Year Fixed Rate ISA	3.80%	4.75%	6.34%	Fixed for 3 years
				ISA transfers in allowed
				180 days' loss of interest for transferring out or closure

Find the best savings accounts for you - Compare long term fixed rate accounts

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 anytime.