Fixed rate bonds, how savers can get the best rates | moneyfacts.co.uk

Michelle Monck

Michelle Monck

Consumer Finance Expert
Published: 07/05/2020

Savers with fixed rate bonds maturing in 2020 are likely to struggle to find interest rates at the same or in excess of their maturing deal, according to research from Moneyfacts.co.uk. Our research found only three periods between January 2009 and April 2020 when savers with maturing one- and two-year fixed rate bonds could achieve a better rate with their next equivalent bond product. While five-year fixed rate bonds have never paid a higher average interest rate during this period.


One-year bond holders could achieve better rates in April 2011 to March 2012, April 2015, June 2015 to January 2016 and September 2017 to August 2019. While two-year bond holders were better off in February 2011 to July 2011, May 2012 to August 2012 and June 2018 to September 2019.
As average rates for one-year fixed rate bonds continue to decline in 2020, by 0. 21% between January to 1 May 2020, savers will need to make sure they look for the very best savings rates to maintain their levels of interest during 2020 and beyond.

How to get the best rate for a maturing fixed rate bond?

Savers can protect themselves from the effect of declining interest rates by making sure they find the top interest rate available. For example, on 11 March 2020 the very best one-year bond rate paid 1.65% interest, this is now 1.55% from BLME, and Habib Bank Zurich, with only 0.02% between the current top three rates for fixed rate bonds.


Our research of the market also shows savers are preferring shorter-term bonds. We compared visits to our site in April 2018 to April 2020, and the share of visits to five-year fixed bonds halved from 21% to 10%, while two- and three-year increased. One-year bonds remained the most popular with 44% share of the market.


Those savers preferring a fixed rate with a term of less than one-year will currently find the best rates from QIB and Zenith through the Raisin platform. The nine-month fixed rate bond from QIB Raisin offers 1.40%. Zenith Bank (UK) Ltd has a six-month bond paying 1.35%. Both accounts can be opened with £1,000, pay interest on maturity and can be opened online.
Savers wanting to open these accounts will need to register for the Raisin platform first and then complete the application process there. Accounts opened with these banks through the Raisin platform are protected by the Financial Services Compensation Scheme up to £85,000. However, if savers have other savings held directly with these banks that is more than £85,000 in total then this excess will not be covered.

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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