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The name is bond….fixed rate bond

The name is bond….fixed rate bond

Category: Savings

Updated: 31/10/2012
First Published: 31/10/2012

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 It is now over 6 months old so the content may be out of date.

The nation has been going 007 crazy recently following the release of the latest James Bond movie.

Bonds of the fixed rate variety can be a great way to achieve the best return on your savings, with many long-term accounts offering some of the most competitive rates in the savings market.

Here are some tips to finding the best fixed rate, helping to ensure your hard-earned money-pennies are left neither shaken nor stirred.

How do these accounts work?

  • Fixed rate bonds require savers to place their money away for the duration of the deal, usually ranging from six months to five years, whilst receiving a fixed rate of interest each month/year.
  • Unlike variable rates, which move alongside base rate, fixed rates will stay the same for the entire term, offering the peace of mind of a guaranteed return.

Can I access my funds during the term?

  • The majority of these deals are designed for savings to be left untouched for the duration of the term. If you need regular short-term access to money, these accounts are not for you!
  • Always check the account's terms and conditions prior to withdrawing money to avoid falling foul of any penalties.

Do bonds usually require large deposits?

  • Not necessarily, although it is usually a good idea to invest as much money as possible initially. Some bonds only need a minimum investment of £1, whilst others may require larger deposits.

What if I want to invest more money?

  • Extra deposits can be made with most bonds. It is always best to check with your provider to ensure your bond allows further additions.

Will I be rewarded for investing over a longer period?

  • Generally speaking, the longer the term of the bond, the higher the rate of return will be.
  • Never be tempted to open a long-term bond, ie, up to four to five years, if you do not think you can commit to tying funds up for the term.
  • Take time to assess your current and future lifestyle plans and savings habits prior to taking out a long-term bond to ensure it is definitely the best choice for you.
  • An important factor to bear in mind is that rates considered competitive at the moment may not be quite so appealing in five years time.
  • Fixed rates will not budge when base rate reduces or increases, so you could find yourself stuck on an uncompetitive rate further down the line if interest rates decide to increase.

What Next?

Compare the Best Short Term Fixed Rate Bonds

Compare the Best Long Term Fixed Rate Bonds

Check out our tip to the '6 cracking 1 year fixed rate Bonds'

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.