COMPARE THE BEST FIXED RATE BONDS

05.01.2010 ICICI Bank have launched some great new rates on their fixed rate bonds plus they are covered under the UK's FSCS. The minimum investment is £1,000 and you can choose to have the interest paid monthly or annually.  3 year Fixed Rate Bond 4.60% 4 year Fixed Rate Bond 4.50% 2 year Fixed Rate Bond 4.25% 18 month Fixed Rate Bond 3.60% 12 month Fixed Rate Bond 3.40% The 2 and 3 year Hisave fixed rate bonds are best buys and more information can be found on the ICICI fixed rate bonds website.

What is a Fixed Rate Bond

Fixed rate bonds are savings accounts you take out with a bank, building society or other financial organisation that gives you a fixed rate of interest over the term you choose.

Are Fixed Rate Bonds a good deal for Savers?

With UK interest rates at only 0.5%, inflation negative and a few fixed rate bonds offering an interest rate of 5% they are worth considering as even a 40% tax payer will currently get inflation beating returns. The thing to consider though is whether you can afford to tie up your money for the period required as generally the high rates of interest fixed rate bonds offer is because you have no access to the money for the period you have chosen to invest in them for. If you are worried about tying up your savings consider an alternative account like the Santander instant access savings account that is currently offering 2.50%

When is Interest paid on a Fixed Rate Bond?

Fixed rate bonds often offer a choice of annual, on maturity or monthly interest payments. If you choose the monthly option you will sometimes find the rate of interest might be slightly lower and the minimum investment level higher. A selection of some of the highest interest rates on some of the best fixed rate bonds including details on how the interest is paid can be found here

What happens if i need to access the savings in the Fixed Rate Bond before maturity?

This is something you need to consider before investing in a fixed rate bond. Some bonds do not allow closure before the end of the term and others will penalise you with loss of interest. For example on the 5 year fixed rate bond from Nationwide you will lose 365 days of interest if you close the bond early. So always make sure the funds invested in a fixed rate bond will not be required before the end of the term.

Fixed Rate Bonds Summary

So having decided you want a fixed rate bond and that they are a suitable product for your savings you need to determine the term or length of time you want to invest. The terms can be as short as 6 months with many other terms available like 1 year, 2 years and 3, 4 and 5 years. The other things to consider are the minimum investments levels required. Some require savers to deposit as little as £1 while others require as much as £25,000. Finally check to see if they are covered under the UK's financial services compensation scheme so you have the £50,000 protection.