By tying up funds in fixed savings bonds, customers can guarantee the rate for the term and protect themselves against future cuts.
The best deals are unlikely to be around for long so it’s advisable to act fast when you find a suitable account.
Savers who have used up their cash Isa subscription for this tax year (£20,000), and want to deposit any extra savings into fixed-rate bonds or easy-access savings accounts, should read this guide (which will be updated as deals change) to find out the best rates on offer. It’s part of our series of articles that highlight the best savings deals – and expose the catches.
Best fixed-rate bonds
Metro Bank pays 1.95pc to customers who have a minimum of £500 to save.
If you open the bond online an instant access account will be opened automatically at the same time. This account is used to transfer funds into the bond and back again when it matures.
You’ll need to deposit cash into the instant access account within 30 days or it will be closed and your bond won’t be activated.
Customers who open the bond in one of Metro Bank’s branches will need to open an instant access account or current account first.
Those interested in an alternative type of bank account could earn more with the Islamic provider Bank of London and the Middle East. It pays pay 2pc over 12 months, however the rate is not guaranteed.
Adhering to Sharia principals, the banks offer an “estimated profit rate” which could change during the term.
If it cannot deliver, it offers customers the option of withdrawing their funds, plus the profit earned up to that point, without penalty.
BLME customers need at least £25,000 to open an account.
Atom Bank and Paragon Bank both pay a top rate of 2.05pc.
Atom Bank’s account must be opened and managed on its mobile app which can be found on the App Store or Google Play. Customers must have at least £50 to save.
Paragon Bank accounts can be opened online with £1,000.
Al Rayan Bank, another Islamic provider, pays a target profit rate of 2.2pc. Accounts can be opened with £1,000.
BLME pays an anticipated rate of 2.1pc on deposits of at least £25,000.
The top three-year bond is offered by National Savings & Investmentsand Sensible Savings which both pay 2.2pc.
NS&I’s Guaranteed Growth Bond can be opened online but customers can only deposit a maximum of £3,000. Withdrawals are permitted subject to 90 days loss of interest.
Sensible Savings, part of the Access Bank UK, pays a top rate on deposits of at least £5,000. Accounts can be opened online or by post.
Al Rayan Bank anticipates a rate of 2.3pc although this is not guaranteed.
BLME offers a target rate of 2.25pc.
Tesco Bank offers a top rate of 2.12pc – significantly less than the market leading three year bonds.
Accounts can be opened and managed online and by phone. Interest must be paid into a nominated account.
Those willing to seek an alternative savings account could earn 2.4pcwith the Islamic provider Bank of London and the Middle East. However savers need at least £25,000 to open the account.
Close Brothers pays 2.4pc on deposits of at least £10,000. Accounts can be opened by post or phone.
Those with smaller balances might want to consider Paragon Bank or Vanquis Savings’ five-year bonds which offer 2.35pc. Both accounts can be opened with £1,000.