Don’t just roll over your maturing fixed rate bond

22nd September 2016

With all the doom and gloom surrounding savings rates at the moment, you might be forgiven for having lost interest (excuse the pun) in checking that you are earning the best rates possible. And whilst it’s true that if you have a bond maturing, even from just 12 months ago, you are likely to see a significant drop in the amount of interest you can earn going forward, if you choose a best buy bond this year, the fact is that you can usually do better than simply rolling over with the same provider. If you have a longer term fixed rate bond that is coming up for maturity, you may not even be offered another long term option, but if you are, make sure that it’s competitive because the improvement gained by switching providers, could be even more significant.

This is because sadly, in the savings market, not only does loyalty rarely pay, as we also see all the time with car and home insurance, but over the last five years a lot of new savings providers have entered the market and they tend to be offering the best rates.

Our Fixed Rate Bond best buy tables are peppered with providers that you wouldn’t have heard about five years ago; Charter Savings Bank, Hampshire Trust Bank and RCI Bank, to name just a few.

But these providers are all covered by the Financial Services Compensation Scheme or an equivalent scheme, so are certainly worth a look, as they could be offering substantially more than you might earn by just rolling over your maturing fixed rate bond.

Some of the current best rates include Vanquis Bank offering 2.01% gross/AER on its 5 year fixed rate bond and 1.80% gross/AER on its 4 year fixed rate bond. RCI Bank is paying 1.65% gross/AER on its 3 year fixed rate bond. Julian Hodge Bank is paying 1.50% gross/AER on its 2 year bond and Charter Savings Bank is paying 1.38% gross/AER on its 1 year fixed rate bond.

For alternatives, you can get a little more interest in Sharia compliant bonds which offer an expected profit rate rather than a guaranteed interest rate due to the structure of the accounts. BLME is offering 2.05% gross/AER on its 5 year fixed term account and 1.80% gross/AER on its 3 year account, while Al Rayan Bank is offering 1.40% AER on its 12 month fixed term deposit account.

And don’t forget that there are other accounts that could help you to boost your savings a little more, if you head off the beaten track. High Interest Current Accounts are offering up to 5% AER, albeit on smaller balances and with lots of terms and conditions, but in these tough times, every penny counts. 

If you want some help to find the best rate for your maturing fixed rate bond or would like some reassurance about a provider you haven’t heard of before, please ring us for free on 0800 321 3581 – we’d love to speak to you.

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