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. Most accounts will require the account holder to be a UK resident and aged 18 or over.
Seven-Year Accounts
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. Spread betting and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread betting and CFDs work and whether you can afford to take the high risk of losing your money 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. 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. 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. 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. 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. 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. 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. 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
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
There are three main steps when it comes to deciding which fixed-rate bond account is best for you. 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. 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. 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. Customers must be 100% sure that they want to fix a set amount of funds away for the account’s stated period of time or face early withdrawal fees. Accounts have an initial deposit, with no extra deposits allowed. However, if the customer has a significant amount of money to save, they will get access to the highest interest rates on the market. WikiJob does not provide tax, investment or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.
