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Fixed rate bonds have often been popular with savers as they not only offer a fixed rate for the duration of their term, but also usually offer the best savings rates overall.
Indeed, today the top saving rate is available on a five year fixed rate bond, but with saving rates across the charts at record lows, many savers are reluctant to lock into a long-term bond due to future uncertainty and concerns that a rise in inflation will erode their savings.
This concern is not unfounded, as the top rate being offered in the fixed bond chart is below the Bank of England’s target inflation rate of 2%. Gatehouse Bank currently pays an expected profit rate of 1.50% AER on its five-year account, which if a saver locked into and the Bank of England meets its target rate of inflation, would result in the saver’s deposit being eroded by inflation.
12 months
Note: accounts not covered by the Financial Services Compensations Scheme have not been included.
The best fixed rate bonds for all but one-year terms have changed this week. The best five-year fixed rate bond is now from Shawbrook Bank with its 5 Year Fixed Rate Bond Issue 33. The account pays 1.25% gross with interest paid on the anniversary of the account opening and 1.24% gross with monthly interest. The minimum deposit to open this account is £1,000 and it can only be opened online and managed online and by phone.
There are multiple savings providers offering the best rate for a three-year fixed rate bond this week. BLME has been consistently in the best buy tables during the whole of 2020 and this week its Premier Deposit Account offers an expected profit rate of 1.00% gross. The minimum deposit is £1,000 and interest is paid on anniversary. The account may be opened online and operated by post. The other providers offering the same rate include: