Post Office fixed rate bonds
- Choose your own term - 1, 2 or 3 years
- Save from £500-£1million
Apply online for Post Office fixed rate bonds, or compare other leading deals to find the right one for you.
Advantages and disadvantages of fixed rate bonds
- The interest rate offered is guaranteed for the term of the bond. This is unlike instant access savings accounts where the interest rate can go down or up at short notice.
- Different banks and building societies will have different views on medium to long term interest rates. If interest rates rise more slowly than expected a fixed rate bond may give you a better return than what you could expect from an instant access account.
- Some fixed rate bonds provide flexibility e.g. 1 withdrawal over the term.
- Fixed rate bonds range from 2 months to 5 years in duration so you can choose a term that suits your circumstances
- Many fixed rate bond providers offer online access so you can see how much interest you are earning.
- The benefit of enjoying a higher rate of interest must be weighed against tying up your capital for a fixed term. If you need access to your capital before maturity this may not be possible and if it is there may be interest penalties.
- If interest rates rise over the term of the investment you may find the interest rate on your capital is no longer competitive compared to new offerings in the market.
- Many fixed rate bond providers require a high minimum deposit e.g. £5,000
If you are considering taking out a Post Office fixed rate bond you may also want to consider alternative investment options to find the best choice for you before you lock your money away.
- Tracker Bonds - With this type of bond your money is secured for a predefined length of time as with a fixed rate. However instead of the rate of interest you are offered staying consistent throughout the term, a tracker’s rate is reflective of the Base Rate set down by the Bank of England. If the base rate either rises or falls so too will the interest rate on your savings bond.
- Instant access accounts - Usually have lower rates of interest on them than bonds, but you have the advantage of being able to make a withdrawal at any point.
- Structured Deposits – this type of saving plan generally offers better potential interest payments but interest gains are not guaranteed. If the index or Indices the structured deposit is tied to fails to perform in the way stated you will get back only your original investment without any interest.