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Top 6 inflation-beating fixed rate bonds

Top 6 inflation-beating fixed rate bonds

Category: Savings
17/02/2017

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 It is now over 6 months old so the content may be out of date.

Inflation jumped to 1.8% in January, official figures show, the highest it's been since June 2014 and a far cry from this time last year, when it stood at just 0.3%. Unfortunately, this has had a devastating impact on the number of savings accounts that can match or beat it, with just 23 paying a rate of 1.80% or above - all of them fixed rate bonds, and all over the longer term.

This means finding an account that can provide an inflation-beating return is becoming increasingly difficult, but if you opted for one of those long-term deals, you stand the best chance of achieving your goal and keeping your savings protected from the ravages of inflation. You may have to lock your money away for a few years, but the returns could be worth it - particularly with rates edging up recently - so read on to find the top inflation-beating fixed rate bonds that can give you the best returns possible.

Top 6 inflation-beating cash ISAs:


AER
Details

bank of London and the Middle East (BLME)
Premier Deposit Account
2.25% AER
  • £25,000 minimum deposit
  • Rate fixed for five years
  • Further additions, withdrawals and early access not permitted
  • Must be opened online before becoming post and internet-operated
  • Interest paid on anniversary and must be paid away
  • Linked product: must have or open a BLME current account to hold funds pending investment
  • Sharia'a compliant account

This account from Bank of London and the Middle East comfortably takes the top spot by paying an expected profit rate of 2.25%, far higher than any other bond available, provided you've got a minimum of £25,000 to invest. It's a hefty deposit requirement, but for those happy with the restrictions - both the typical access restrictions and linked account requirements - it could pay off.


AER
Details

Secure Trust Bank
Fixed Rate Bond 5 Year term (Series 29)
2.11% AER
  • £1,000 minimum deposit
  • Rate fixed to 10.03.22
  • Further additions allowed for a limited period
  • No withdrawals or earlier access
  • Must be opened online before becoming post and phone-operated
  • Interest paid yearly and must be paid away

Second place in the charts goes to Secure Trust Bank, whose five-year bond pays 2.11% on a minimum investment of £1,000. Further additions are permitted for a limited period, but as is common in the sector, access to funds won't be permitted until the full term is up, which in this case runs to 10 March 2022.


AER
Details


Masthaven Bank Ltd
5 Year Fixed Term Bond

2.06% AER
  • £500 minimum deposit
  • Rate fixed for five years
  • Further additions allowed for seven days after account opening
  • No withdrawals or earlier access
  • Must be opened online before becoming phone and internet-operated
  • Interest paid on anniversary

Just making the top three is this five-year deal from Masthaven Bank which pays a rate of 2.06% from a minimum deposit of £500. It allows further additions for a week after the account has been opened, but withdrawals and early access won't be permitted, so it'll only be suitable for those comfortable with a five-year commitment.


AER
Details

Atom Bank
5 Year Fixed Saver
2.05% AER
  • £50 minimum deposit
  • Rate fixed for five years
  • Further additions for a limited period
  • No withdrawals
  • Account must be opened and operated by mobile app
  • Interest paid on anniversary

Next up is this simple, straightforward deal from Atom Bank that pays a rate of 2.05% from a minimum investment of just £50. This wholly mobile-operated account permits further additions for a limited period, but once again, no withdrawals will be allowed.


AER
Details


Ikano Bank
Fixed 5 Year Saver

2.05% AER
  • £1,000 minimum deposit
  • Rate fixed for five years
  • Further additions allowed within 14 days of account opening
  • Withdrawals and early access not permitted
  • Must be opened and operated online
  • Interest paid on anniversary

This account from Ikano Bank secures a top-five spot by paying a rate of 2.05% to those with a minimum of £1,000 to invest. It allows further additions for up to 14 days after opening the account, but doesn't permit early access, so you'll need to be confident about locking your final investment away for the full five years.


AER
Details

Paragon Bank
Five Year Fixed Rate
2.05% AER
  • £1,000 minimum deposit
  • Rate fixed for five years
  • Further additions allowed for five days from account opening
  • No withdrawals or early access
  • Access via nominated current account
  • Internet operated
  • Interest paid on anniversary

Just squeezing into the top six is this five-year deal from Paragon Bank. It pays 2.05% on a minimum investment of £1,000, and while it permits further additions for a limited time, early access again won't be possible. Savers must therefore be certain that they're happy with their overall investment and the length of the term from the outset.

Information & Rates correct as at: 16.02.2017

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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