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Top 6 inflation-beating fixed rate bonds

Top 6 inflation-beating fixed rate bonds

Category: Savings
Author: Lieke Braadbaart
Date: 18/10/2018

With the Consumer Prices Index seeing a welcome drop to 2.4% in September according to the latest statistics, savers will find that even some four-year fixed rate bonds can currently beat it. While this means you'll still have to lock your money away for quite a while to be able to gain an inflation-beating return, there are now once again more options for doing so.

That's not the only motivation to lock your funds away over the long term, of course, with the rates on offer providing plenty of incentive on their own. Fixing your rate for five to seven years could also benefit those with a long-term goal in mind, as you won't have to think about your funds in the meantime – and you can't get tempted to spend the money either.

There are naturally some restrictions to these bonds, with early access often not possible, or only on a big penalty. You also likely won't be able to add funds to the account later on, which is why these bonds tend to appeal more to those with a sizeable savings pot they'd like to set aside. If this sounds like you, then read on to find the top inflation-beating fixed rate bonds that can give you the best returns possible.



AER Details
BLME
Bank of London and The Middle East
Premier Deposit Account
Go to Site
2.75%
(anticipated profit rate)
  • £10,000 minimum deposit
  • Rate fixed for seven years
  • No additions, withdrawals or early access allowed
  • Linked product: requires a BLME current account to hold funds pending investment
  • Can only be opened online, but then also operated by post and phone
  • Interest paid on the anniversary of the account opening and must be paid away
  • Sharia'a compliant

Bank of London and The Middle East (BLME) takes the top spot with an inflation-beating anticipated profit rate of 2.75% fixed for seven years, making it the undisputed market leader. It requires a minimum of £10,000 and does not allow any access prior to maturity, but the return on offer could easily make this worth opening a linked current account.


AER Details
Ikano
Ikano Bank
Fixed 5 Year Saver
2.70%
  • £1,000 minimum deposit
  • Rate fixed for five years
  • Additions welcome within 14 days of the account opening
  • No withdrawals or early access allowed
  • Can only be opened and operated online
  • Interest paid on the anniversary of the account opening and must be compounded

In second place is this internet-exclusive account from Ikano Bank, which pays the joint market-leading rate over five years of 2.70% on a £1,000 investment. This account allows additions for a limited time, but no access, so savers will want to be certain before they agree to set their funds aside for the whole term.


AER Details
Close Brothers Savings
Close Brothers Savings
5 Year Fixed Term Deposit
2.70%
  • £10,000 minimum deposit
  • Rate fixed for five years
  • No additions, withdrawals or early access allowed
  • Can only be opened by post, but then also operated over the phone
  • Interest paid on the anniversary of the account opening and must be paid away

Close Brothers Savings completes the top three with another account that pays 2.70% for those looking to put away a minimum of £10,000 over five years. The usual access restrictions apply, but this could be a great choice for those who don't want to bank online – and the rate is still inflation-beating.


AER Details
BLME
Bank of London and The Middle East
Premier Deposit Account
Go to Site
2.70%
(anticipated profit rate)
  • £10,000 minimum deposit
  • Rate fixed for five years
  • No additions, withdrawals or early access allowed
  • Linked product: requires a BLME current account to hold funds pending investment
  • Must be opened online, but can then also operated by post and phone
  • Interest paid on the anniversary of the account opening and must be paid away
  • Sharia'a compliant

BLME does it again with a second account making the chart. This time, it's the five-year version of its Premier Deposit Account, which also pays the market-leading anticipated profit rate of 2.70% over five years on a minimum deposit of £10,000. The same restrictions and linked account requirements apply as with the seven-year alternative, making this an excellent alternative for those who don't want to stash their savings for more than half a decade.


AER Details
Gatehouse Bank
Gatehouse Bank
(via Raisin UK)
5 Year Fixed Term Deposit
Go to Site
2.68%
(anticipated profit rate)
  • £1,000 minimum deposit
  • Rate fixed for five years
  • Additions permitted for five working days from account opening
  • No withdrawals or early access allowed
  • Must be opened online, but can then also be managed by phone and post
  • Interest paid on its anniversary and must be paid away
  • Bonus incentive available depending on investment
  • Sharia'a compliant

Taking up fifth place is Gatehouse Bank, which offers a near market-leading five-year fixed rate bond paying 2.68% on a minimum of £1,000. Additions are allowed for a little while, but as per usual access is not. However, the incentive of a bonus separate from the interest rate could sway savers. Note that this account operates under Islamic finance principles, which means the rate displayed is the expected profit rate.


AER Details
Paragon Bank
Paragon Bank
5 Year Fixed Rate Savings Account
2.66%
  • £1,000 minimum deposit
  • Rate fixed for five years
  • Additions allowed within five days of the account opening via a nominated account
  • Withdrawals and earlier access not permitted
  • Internet-operated
  • Interest paid on its anniversary

Completing the top six is Paragon Bank, with a bond that pays a still inflation-beating 2.66% over five years on a minimum investment of £1,000. This is another account that allows additions for a limited period, but no other access, so savers will want to make sure they are happy to lose access to their funds for the entire term.

Information and rates correct as at: 18.10.2018

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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