With the Bank of England rate being at a 14-year high, you could say that things are finally looking up for savers.
However, with the current cost of living crisis being at the forefront of everyone’s mind, it’s important now more than ever to make sure you’re getting the most out of your savings.
With 5 Bank of England base rate increases so far this year* and more predicted in the coming months, it can be hard to know what’s best to do with the savings you have.
One of the questions we hear being asked is: Should I choose a fixed rate bond?
Here we explore this a little more and look at what else you should consider.
As the name suggests, with a fixed rate bond your interest rate is fixed throughout the term you have chosen and won’t change during that period. This means at the end of the term you’ll know exactly how much interest your savings will earn, which can be a great help when planning your finances.
Fixed rate bonds also tend to have a higher rate of interest than easy access or notice accounts, so by fixing your savings you could be earning more overall.
Plus, many providers offer monthly interest rates, which means you can choose to have the interest you’ve earned paid directly to your external nominated bank account on a monthly basis. This might be particularly helpful at the moment to pay for extra monthly bills you may have, to supplement your income, or just to give you a little bit of extra spending money.
There are a few things to remember with a fixed rate bond, one of these being that you won’t be able to access your savings during the term of the account. You therefore need to be comfortable that however much you choose to save, you won’t need access to those funds during the term of the account.
Further deposits usually aren’t allowed once the account has been opened, although some providers do allow you a short window to add more to the account (usually 14 days after the opening date), after which no further deposits can be made.
However, there is usually no limit to the amount of fixed rate bonds you can open with a provider, as long as you have the minimum opening balance required. Therefore you could always choose to spread your savings over different accounts with different fixed rate periods and even across different providers.
Now is a good time to start thinking about your savings and what account suits you the best and it’s worth having a shop around. Comparison websites and “best buy” tables can be a great source of information when looking.
Ensuring your savings are secure is important and many providers are part of the Financial Service Compensation Scheme (FSCS), which protects eligible deposits up to £85,000 per customer, but be sure to check that your provider is covered by the scheme.
View Kent Reliance’s latest range of fixed rate bonds.
*As at September 2022