Top 6 inflation-beating fixed rate bonds - Savings - News | moneyfacts.co.uk

News

Moneyfacts.co.uk News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

Top 6 inflation-beating fixed rate bonds

Top 6 inflation-beating fixed rate bonds

Category: Savings
24/05/2018

With inflation down again in April, it's finally possible to bring back this old favourite top six, as there are now even some four-year fixed bonds that can beat the inflation rate of 2.4%. While 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 more options for doing so available than there have been since March 2017, when the Consumer Price Index was last below 2.5%.

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. They not only beat inflation, but also surpass the top rates available in March last year. 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
PCF Bank
PCF Bank
7 Year Term Deposit Issue 6
2.75%
  • £1,000 minimum deposit
  • Rate fixed for seven years
  • Additions allowed for 14 days from account opening
  • Withdrawals and early access not permitted
  • Account can be opened by post or online, and then operated over the phone as well
  • Interest paid on anniversary and must be paid away

PCF Bank takes the top spot with this deal that pays an inflation-beating return of 2.75%, making it the joint market-leader in this sector. It can be opened with £1,000 and allows additions for 14 days, offering some flexibility. However, interested savers must be willing to lock away their funds for seven years, as early access will not be permitted.

AER Details
Secure Trust Bank
Secure Trust Bank
7 Year Fixed Rate Bond (26.6.25)
2.75%
  • £1,000 minimum deposit
  • Rate fixed until 26.06.2025
  • Additions of at least £1,000 permitted while the issue remains open
  • No withdrawals or early access allowed
  • Must be opened online, but can then be managed by phone as well
  • Interest paid yearly

In second place is this account from Secure Trust Bank, which also pays the market-leading 2.75% over seven years – provided you have a minimum of £1,000 to invest. This account allows additions while it remains open to new subscribers, but no early access, so savers must be happy to set their funds aside for the whole term.

AER Details
Vanquis Bank
Vanquis Bank
Vanquis Bank Savings
Go to Site
2.70%
  • £1,000 minimum deposit
  • Rate fixed for five years
  • No additions, withdrawals or early access allowed
  • Access via nominated current account
  • Must be opened online, but can then be managed by phone and post as well
  • Interest paid on its anniversary

Vanquis Bank completes the top three with the top five-year deal in the chart. It boasts a rate of 2.70%, not far behind the market-leaders, on a minimum £1,000 investment. While the usual fixed bond access restrictions apply, this could be a great choice for those looking to set their funds aside for a little less time – and the rate is still inflation-beating.

AER Details
Secure Trust Bank
Secure Trust Bank
6 Year Fixed Rate Bond (26.6.24)
2.70%
  • £1,000 minimum deposit
  • Rate fixed until 26.06.2024
  • Additions of at least £1,000 permitted while the issue remains open
  • No withdrawals or early access allowed
  • Must be opened online, but can then be managed by phone as well
  • Interest paid yearly

Secure Trust Bank manages to get another account in this top six with its six-year deal, which pays a rate of 2.70%. Its other features match the bank's seven-year offering, making this a potentially attractive deal for those investors reluctant to set their savings aside for seven years.

AER Details
Secure Trust Bank
Secure Trust Bank
5 Year Fixed Rate Bond (26.6.23)
2.66%
  • £1,000 minimum deposit
  • Rate fixed until 26.06.2023
  • Additions of at least £1,000 permitted while the issue remains open
  • No withdrawals or early access allowed
  • Must be opened online, but can then be managed by phone as well
  • Interest paid yearly

Secure Trust Bank does it again with yet another deal making it into the chart. This version of the account pays 2.66% over five years to see it sit in fifth place. So, if you liked their other bonds but would prefer a slightly shorter term, this account could be for you.

AER Details
United Bank UK
United Bank UK
5 Year Fixed Term Deposit
Go to Site
2.65%
  • £2,000 minimum deposit
  • Rate fixed for five years
  • No additions allowed
  • Withdrawals and earlier access possible at the bank's discretion, and subject to 365 days' loss of interest
  • Access via nominated current account
  • Can be opened online, in branch or by post, but then operated by post and in branch only
  • Interest paid on anniversary and must be paid away

Completing the top six is this deal from United Bank UK, which pays a rate of 2.65% over five years on a minimum investment of £2,000. It has the unique distinction of being the only account in this round-up that allows earlier access, though this is given at the bank's discretion and would result in a year's loss of interest, so savers should think carefully before deciding to withdraw funds from this flexible bond.

Information and rates correct as at: 24.05.2018

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.

Close