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Keep your cash growing with fixed rate bonds

With savings interest rates remaining at an all time low, savers are looking for guaranteed returns on their investments. There are some competitive rates on offer for those prepared to tie up their savings in fixed rate bonds. Choose the deal and time period that best suits your savings requirements.

Keep cash out of harm's way

Fixed rate bonds involve investing your money for a defined term with a guaranteed return. Essentially it involves calculating the best rate while accepting that if interest rates should suddenly surge, your money will be tied in to what might begin to look like an unattractive return.

Economic experts are predicting that interest rates are not going to climb steeply in the immediate future. If there is a rise, it will be very gradual. This means that accepting a fixed rate is hardly much of a risk.

Banks and building societies are keen to attract fixed rate bonds customers so some of the deals can seem attractive. The best rates are always on offer to those prepared to tie up their capital for longer periods.

Interest rates and offers are constantly changing, so using comparison sites is advisable to keep up to date with the latest deals. For one year fixed rate bonds, anything paying over 3.25% interest is very competitive, although these deals usually involve penalty clauses for early withdrawal.

For two year fixed-rate bonds, it is possible to find returns as high as 3.75% for those with £25,000 to invest. Savers with smaller amounts can find some deals offering 3.5% returns.

Safety first

The attraction of fixed rate bonds is that your returns are predictable and guaranteed. They are a useful way of ensuring that a nest-egg that isn't required for a year or two can still keep pace with inflation. Like any form of cash savings in the current climate though, a bond will not offer particularly lucrative returns.

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