Customers should also take care consider the length of their fixed rate bond deal.
Long term deals tend to offer the highest return in terms of interest rates for fixed rate bonds, however it should be remembered that the majority of providers will not allow customers to access their savings until the end of the agreement when the money has matured.
The interest rates on short term fixed rate bonds may not be quite as good compared to long term deals, but customers will of course have access to their money sooner.
If you are searching for fixed rate bonds from Cater Allen or any other provider, it is important to remember that although fixed rate agreements offer considerable security, they will also remain the same regardless of any economic improvements to interest rates, and should therefore be carefully selected.
As with most bonds you lose access to your money for a fixed period of time, and may end up with less in return if you close them early, it is important to try and get the best deal you can. Therefore shopping around before you take one out is a really wise decision.
Other types of plan you may wish to think about
- Structured Deposits – Like a bonds a structured deposit requires you to lock up your savings for a predefined period. This type of plan is normally tied to an index such as the FTSE 100. If over the plan the index or indices perform in a certain way you will receive your original investment back plus an interest payment typically larger than those offered by bonds or savings accounts. However if it does not perform in a certain way set out at the start of the plan you will receive your investment back but will no gains on it, so it is a risk that needs to be carefully considered beforehand.
- Tracker bonds – These are similar to fixed rate, but instead of your interest rate staying consistent throughout the bond’s term, it will change in reflection to any increases or decreases in the Base Rate set by the Bank of England. This means if during the term the base rate raises you will benefit from an increase in how much you receive in interest, if however it decreases so too will your plan’s interest rate
- Savings Account – If you are looking into how you can earn interest on your savings while maintaining access to them should you ever need them before the end of the term then an instant access savings account may be the solution to you. Although they normally offer lower interest rates than bonds or structured deposits, they have the advantage of unlimited free withdrawals meaning if you should ever need your savings you don’t need to worry about any forfeit for closing the account early.