MoneyBroker’s Guide to Fixed Rate Bonds

If you are wondering what options you have for your savings and are looking to invest a lump sum, then you must have thought through fixed rate bonds. They are a great way to invest your money with a guaranteed fixed rate till the end of the term. Fixed rate savings bonds usually pay higher interest rates than easy access accounts, however you have to be sure you can commit your money for the full term. There are a few things that you should know about fixed rate bonds so read on our detailed guide below.

Important things you need to know about fixed rate bonds


* Fixed rate bonds offer good and stable rates that won’t change until the end of the term. If the expectations are that the interest rates will soon go up you might lose out but in a stable economy you will be enjoying the benefits.

* Fixed rate bonds are good for lump sums as most of them have a minimum investment requirement. They are not good for savings starters.

* Your money is locked for the period of the term. This means that you can’t withdraw or add more money to the sum you have invested in the beginning.

Minimum investment – most of the fixed rate bonds have a minimum investment. The bigger the minimum the better the rate is.

All in all we’d recommend you opting for a fixed rate bond if you have more than £5,000 in savings and you won’t need access to this sum for the period of the term.


Where to buy?


Many banks and building societies issue fixed rate bonds frequently so watch out. You get one over the phone, online or in branch. You will be asked to provide them with ID and proof of address which can be your driving license, passport or a recent utility bill or bank statement.

Here we have compared  fixed rate bonds for 1y ear and 2 years from few providers:

Provider Period Minimum amount Interest rate
 Investec 1 £25 000 1.35%
 Paragon 1 £1 000 1.25%
 RCI bank 1 £1 000 1.25%
 Investec 2 £25 000 1.45%
 Paragon 2 £1 000 1.40%
 RCI bank 2 £1 000 1.45%


We recommend you to pay a visit to MoneySuperMarket or LoveMoney for and easy online comparison between the different bonds.


How to choose the right fixed rate bonds for you?


Keep in mind the following and decide:

- how long you are able to leave the money without having the use them

- interest rates - the higher, the better for your ROI

- how much you want to start with and how much you want to save.




Their biggest advantages are:

Simple – they are a very simple financial product guaranteed by the government. You pay in your money and you get a certain sum after the end of the term.

Great interest rates –you can find high rates on fixed rate bonds that you wouldn’t be able to find on any other financial product.

Flexible – you choose from different terms – from 6 months to 3+ years. Usually the 1-2 year ones are chosen by most of the people.


You may also want to read about: ISAs

The information on this page is designed to help you understand more and make more informed choices. We do not receive any commissions, instead we are funded from companies that we advertise on our website.