🔔 Fixed rate bonds offer relief from falling rates... but act quickly for the best deals.

Author: Anna Bowes
22nd May 2020

The trickle of cuts to savings rates, especially to best buy accounts, has turned into more of a torrent in the last couple of weeks.  And the recent news that the Bank of England could cut the base rate again – and even consider going into negative territory – means that savers who don’t necessarily need access to all of their cash could consider locking some of their money away, to protect themselves against further rate cuts in the near future.

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Since the beginning of the year and therefore before the first devastating base rate reduction in March, cuts to easy access accounts has seen the average rate fall from 0.51% to just 0.29% today – a fall of 43%!

Best buy rates on the other hand have fallen by just 15% or so – and the best rate, from NS&I Income Bonds is currently 1.15% gross.

However, further cuts to these rates are expected, so, should savers lock some of their money away? No one knows exactly what will happen over the next few months or even years, but there is growing sentiment that the Bank of England could cut the base rate further – even below zero.

So, for those who are able, although best buy fixed rate bonds have also fallen over the last few months, they still pay more than easy access accounts and will protect you from any further rate cuts.

The very best one-year account available at the time of writing is with Sharia provider Gatehouse Bank – paying 1.50% Annual Expected Profit Rate. With Sharia accounts, the rate is not guaranteed. In order to comply with Sharia Law the rates listed are an expected profit rate, however to date the EPR has always been honoured. For more information about Sharia accounts take a look at our article Sharia Compliant Accounts.

The best standard one-year fixed rate bond is available via the Atom Bank app – it pays 1.40%. But you do need to open this account via their app which means voice and face recognition, which might not be for everyone.

For those who are not happy to open saving accounts online, while they can’t always access the very best rates, the good news is that there are plenty of competitive accounts that are available via the post – if you can get through to ask them to post you an application form!

For those who would prefer to open an account by post, Punjab National Bank has a one year fixed rate bond on offer paying 1.35% AER although we have had a number of complaints about poor customer service from the bank. Kent Reliance is offering a one year bond paying 1.25% AER at the moment and, although once the account is open it is easy to manage, again we’ve had some comments suggesting that the provider might be struggling to deal with all the enquires they are getting at this difficult time.

The longer term bonds offer the best rates– certainly when it comes to best buy rates. Sharia provider BLME has a seven year bond which is paying an expected profit rate of 1.90% AER and over five years RCi Bank is paying 1.80% for five years.

It's worth noting that some of the very best rates aren’t hanging around for long, so if you do want to take advantage to try and weather the storm, you may want to act now.

For more information on the very best rates available see our Fixed Rate Bond best buy tables and Sharia Fixed Term Accounts to see just what you could be earning if you are prepared to tie up your cash during this uncertain time.