The 9 Fixed-Rate Bonds Worth Your Attention in 2023
Updated October 18, 2023
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- A list of the Top Fixed-Rate Bonds for November 2023:
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- Description of the Best Fixed-Rate Bonds for November 2023
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- What Are Fixed-Rate Bonds?
- Types of Fixed-Rate Bonds
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- Advantages and Disadvantages of Fixed-Rate Bonds
- How to Decide Which Fixed-Rate Bond Is Right for You in 2023
- Frequently Asked Questions
A list of the Top Fixed-Rate Bonds for November 2023:
Seven-Year Accounts
Five-Year Accounts
Three-Year Accounts
One-Year Accounts
With the financial services market all over the place at the minute, it’s important to take control of your finances and get the best deals possible.
This means shopping around for the current accounts and savings accounts that best suit you and your lifestyle.
When it comes to savings, we need to be as savvy and open to options as possible, due to low interest rates and no return for loyalty.
It is worth doing your own research when it comes to where you store your money, whether it’s an everyday current account or a savings pot for the future.
Description of the Best Fixed-Rate Bonds for November 2023
When it comes to choosing a fixed-rate bond, you’ll be required to shop around for the best rates and terms for yourself.
Most accounts will require the account holder to be a UK resident and aged 18 or over.
Seven-Year Accounts
1. ActivTrades
Pros
- No minimum first-time deposit
- Optimal trading execution
- More than 1,000 CFDs
- State-of-the-art trading infrastructure
- Customer support on 14 languages via email, chat and telephone
Cons
- No copy trading
- Not available for US clients
- No bonus for EU based clients
ActivTrades is a traditional CFD broker and has been trading for more than 20 years on 140 markets. ActivTrades is authorized and regulated by the FCA, CSSF and SCB.
Its strong points include:
- No minimum first-time deposit
- No commissions
- Several payment methods for deposits and withdrawals
- Tight spreads from 0.5 pips
It offers one of the best execution speeds in the industry with low latency below 0.004s.
It utilizes the most advanced technology to improve users' trading efficiency – users can automate trades, build integrations and create trading apps using ActivTrades' market-leading CFD and spread betting technology.
Exceptional trading infrastructure is available on ActivTrader and MetaTrader 4 and 5.
ActivTrades invests deeply in specially developed educational materials for its clients – including webinars, regular outlooks, manuals, etc.
Type of offers: ActivTrades focuses on well-developed products in its trading portfolio. Customers can choose from over 1,000 CFD or spread betting instruments across forex, indices, shares, commodities, financials and ETFs.
It also offers investing solutions for its institutional partners.
Spread betting allows UK residents ONLY to trade the prices of financial instruments, including forex, indices, commodities and LSE shares.
2. Shawbrook Bank
Interest rate: 1.35% (1.34% monthly)
Interest paid: Annually or monthly
Minimum deposit: £1,000
Maximum deposit: £2 million
Shawbrook Bank’s seven-year fixed-term account can be applied for online only. It can then be managed via secure message online or via telephone.
Customers must be over the age of 18, reside in the UK and have a UK bank account to be used as a nominated account.
Once open, the initial transfer must be carried out electronically.
3. Gatehouse Bank
Interest rate: 1.5% (expected profit)
Interest paid: N/A
Minimum deposit: £1,000
Maximum deposit: £1 million
Gatehouse Bank’s five-year fixed-term account is operated under Shariah principles, meaning that it is an expected profit rate, not an interest rate.
As this account is monitored daily, if the expected profit rate is not attained, Gatehouse will contact the customer with a new rate. From that point, the customer is then able to choose whether to continue with the account or withdraw their initial deposit as well as any profits accrued.
Customers must be UK residents, over the age of 18 and hold a UK bank account. This account is managed online.
4. BLME
Interest rate: 1.1%
Interest paid: N/A
Minimum deposit: £1,000
Maximum deposit: £1 million
Similar to the Gatehouse Bank account, the BLME five-year fixed-term account also operates with an expected profit rate, rather than an annual interest rate.
Profit is paid annually into a nominated bank account, the same account used to transfer the initial deposit.
Customers must be UK residents and aged 18 or over. Applications must be made online.
5. Secure Trust Bank
Interest rate: 0.8%
Interest paid: Annually
Minimum deposit: £1,000
Maximum deposit: £1 million
Secure Trust Bank’s three-year fixed-rate bond can be managed online or over the phone, with the initial account-opening done on their website.
Your nominated account must be a UK bank account as interest will be paid into this account every year or added to the bond.
Customers must be UK residents aged 18 or over.
6. Paragon
Interest rate: 0.8%
Interest paid: Monthly or annually
Minimum deposit: £1,000
Maximum deposit: £500,000
Paragon’s three-year fixed-rate account can be opened online or through the post.
The initial deposit can be made via electronic transfer or with a cheque but must be within 28 days of opening the account. A nominated account is also required.
Account-holders must be at least 18 years of age and reside in the UK.
7. Atom Bank
Interest rate: 0.45%
Interest paid: Monthly or annually
Minimum deposit: £1,000
Maximum deposit: £50,000
Atom Bank’s one-year fixed-rate account is managed via an app. Customers have seven days to make their initial deposit or the account will be closed.
They will also be required to provide identification via the app.
The initial deposit must be made via electronic transfer from a UK bank or building society.
8. My Community Bank
Interest rate: 0.55%
Interest paid: Annually
Minimum deposit: £1,000
Maximum deposit: £85,000
My Community Bank’s one-year fixed-rate savings account has to be opened and managed online.
A nominated bank is required for the initial deposit, which must be transferred within seven days of opening the account.
Customers must be UK residents and aged 18 or over.
What Are Fixed-Rate Bonds?
Fixed-rate bonds or accounts are designed for people who are putting away a lump sum of money for a set period of time, anything from six months to seven years.
These accounts tend to have the highest interest rates because they are fixed for a length of time. You should only open a fixed-rate bond if you can be without that sum of money for the duration; otherwise, you will be penalised for withdrawing early.
Savers must be 100% sure that they will not need that money in the specified time period, usually by having smaller savings pots elsewhere in case of emergencies.
Interest is usually paid annually on the anniversary of the account opening but check beforehand as this is not always the case.
Fixed-rate bonds are designed for people with a substantial amount of money, who are looking to put it away for a number of years. This could have been achieved from a lottery win, selling a house, solid business investment returns or saving up over a number of years.
You will not be able to top up the account with additional funds so it is an initial deposit and nothing else.
Any amount up to £85,000 per account is secured by the Financial Services Compensation Scheme (FSCS), meaning if the bank were to go bust, your money would still be protected.
Provided the bank is regulated by the Financial Conduct Authority (FCA), your money is safe.
Types of Fixed-Rate Bonds
As well as regular fixed-rate bonds, there are also tracker and ISA versions.
Whilst similar, there are also significant differences, especially with tracker-rate bonds.
Tracker-Rate Bonds
With this type of bond, the interest rate is not guaranteed; it rises (and often falls) in accordance with the Bank of England base rate. With some options, the more you invest, the higher the interest rate.
They’re still for a fixed term so you would be penalised for withdrawing money early.
With the base rate so low at the minute, tracker-rate bonds seem to have all but disappeared from the market.
Tax-Free Fixed-Rate ISA Bonds
Fixed-rate ISA bonds are exactly the same as normal fixed-rate bonds, except they are tax-free.
A limit of up to £20,000 is allowed as an ISA allowance, whether that’s in one account or across the various types of ISA.
A fixed-rate ISA bond is under the cash ISA umbrella.
Advantages and Disadvantages of Fixed-Rate Bonds
Pros
- Higher interest rates
- You will be able to predict how much interest you’ll earn on a set amount
- The interest rate you sign up for is the rate you’ll get at the end of the fixed term
Cons
- You have to tie your money up for a fixed amount of time
The main advantage of fixed-rate bonds is that you will get the higher interest rates of other savings accounts.
Because you’ll be putting your money away for longer, you will be able to predict how much interest you’ll earn on a set amount.
You will not lose any money as the interest rate you sign up for is the rate you’ll get at the end of the fixed term (unless it’s a tracker-rate bond).
The main disadvantage is that you have to tie your money up for a fixed amount of time. You must be 100% sure that you will not need that money before the end of the fixed term.
We recommend having a separate emergency savings account with instant access before opening a fixed-rate bond.
How to Decide Which Fixed-Rate Bond Is Right for You in 2023
There are three main steps when it comes to deciding which fixed-rate bond account is best for you.
Step 1. Decide For How Long You Want to Put Your Money Away
Most bonds are from one year to seven years in the UK, with the occasional three- or six-month account.
Consider anything that might crop up over that time period before choosing an account. Do you have enough in an instant-access account in case of an emergency?
Putting a lump sum of money away into a fixed account is a risk but the reward often outweighs the risk.
Step 2. Think About How Much Do You Want to Save?
Some accounts have a minimum deposit (often £1,000 to £2,000) and usually have an upper limit too.
There’s a fine line between choosing an amount that you know you don’t need to spend and making sure you have enough in an easy-access savings account just in case.
Step 3. Decide if You Want Your Interest Paid Monthly or Annually
Most fixed-rate bonds will pay out annually at the end of the term. However, some do pay interest on a monthly basis.
Those accounts tend to be tracked-rate bonds so it’s important to weigh up the risk of having an interest rate that is not fixed to potentially earning more interest on a regular basis.
Fixed-rate bonds are a type of investment product that offer a guaranteed rate of return over a set period of time. The interest rate on these bonds remains fixed throughout the life of the investment, which can range from a few months to several years.
Inflation can have a significant impact on the value of fixed-rate bonds. If the inflation rate is higher than the interest rate on the bond, the bond may lose value over time.
However, fixed-rate bonds can provide a hedge against inflation if the interest rate is higher than the inflation rate.
Fixed-rate bonds can be purchased from a variety of financial institutions, including banks, credit unions and investment firms. Investors can also purchase fixed-rate bonds through online brokers.
Fixed-rate bonds are typically sold by financial institutions such as banks, credit unions and investment firms. Some governments also issue fixed-rate bonds to raise capital.
The best one-year fixed-rate bond will depend on various factors, including the interest rate offered, the financial stability of the issuer and the investor's risk tolerance.
It is important to compare different options and conduct thorough research before making an investment decision.
The main difference between fixed-rate bonds and variable-rate bonds is that the interest rate on fixed-rate bonds remains fixed throughout the life of the investment, while the interest rate on variable-rate bonds can change over time.
Variable-rate bonds are typically linked to an underlying benchmark, such as the prime rate or the LIBOR rate, and can offer higher returns than fixed-rate bonds but also carry higher risks.
Fixed-rate bonds offer several advantages to investors, including a guaranteed rate of return that is fixed for the term of the bond.
This means that investors know exactly what their return will be, regardless of market fluctuations.
Fixed-rate bonds also provide a predictable stream of income, which can be useful for those seeking a stable source of passive income.
There are several brokers that offer fixed-rate bonds, including Vanguard, Fidelity and Charles Schwab.
It is important to consider factors such as fees, minimum investment amounts and the variety of fixed-rate bonds available when choosing a broker.
The main risk associated with investing in fixed-rate bonds is inflation.
If inflation rises above the fixed rate of return on the bond, investors will lose purchasing power.
Additionally, there is the risk that the issuer of the bond may default on their payments, although this risk is typically lower with government bonds or bonds issued by highly rated companies.
The minimum investment required for fixed-rate bonds varies depending on the issuer and broker.
Some bonds may have minimum investments as low as $100, while others may require larger investments of $10,000 or more.
Yes, fixed-rate bonds can be sold before the maturity date, although this may result in a loss of principal if the bond is sold for less than its face value.
The price of the bond will fluctuate based on changes in interest rates and other market conditions.
The interest rate on fixed-rate bonds varies depending on the issuer, term of the bond and prevailing market conditions.
Generally, longer-term bonds offer higher interest rates than shorter-term bonds, and government bonds typically offer lower interest rates than corporate bonds.
