9 Best Fixed Rate Bonds In 2022 | Expert Guide

A fixed-rate bond is a debt instrument that generates the same level of interest throughout its entire term. If you’re an investor looking to looking for means to earn a steady interest rate, you will find this bond suitable.

We have highlighted nine best-fixed rate bonds from top providers with relatively high-interest rates. Carefully select the one that matches your financial requirements. It will benefit you a lot.

According to Investopedia.com, a fixed-rate bond is a type of debt instrument that pays a fixed coupon rate for the duration of the bond.

Fixed-rate bonds are of two types; The Normal fixed-rate bonds that offer a fixed interest rate for the period of the bond and Tracker rate bonds that give out fixed interest rates at an agreed level.

They offer a lot of benefits which you will discover as you on. Let’s look at why you should consider a fixed rate bond and how it works.

Why Would You Invest In A Fixed Rate Bond?

The main reason people opt for savings bonds is that interest is usually more than you’d get with other, more accessible, savings accounts. But with fixed-rate bonds, you can’t usually take any money out, or put any money in, during the fixed term.

How Do Fixed Rate Bonds Work?

This particular debt instrument can be availed at different terms. Most fixed-rate bonds make it mandatory for investors to deposit a minimum amount to open their account.

Like discussed, a bond with a longer-term attracts a higher interest rate and thus generates more earnings. Generally, fixed-rate bond issuers provide investors with the option to receive interest either on a monthly or yearly basis.

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When compared to most savings accounts, this particular debt instrument requires investors to deposit in a lump sum and usually at the time of opening the account. 

On maturity, investors can either withdraw the money or transfer it to an access account. They may also consider reinvesting the same into another account. Notably, the decision to choose any of these options may depend on the bond issuer or on the terms accompanying the debt instrument. 

Best Fixed Rate Bonds

The table below comprises nine fixed-rate bonds offered by banks in the UK. The basis of our selection is their respective interest rates, terms, and protection scheme.

ProvidedTermOpen WithInterest RateProtection Scheme
Raisin UK AgriBank5 years£1.0001.46% AER fixedMDCS
RCI Bank5 years£1.0001.05% AER fixedMDCS
Paragon2 years£1.0000.9% AER fixedFSCS
Habib Bank Zurich PLC1 years£1.0000.85% AER fixedFSCS
 Derbyshire BS5 years £1003.75% AER fixed
West Bromwich BS5 years£5,000 3.90% AER fixed
 Post Office5 years£5003.85% AER fixed
 Bank of Ireland (NI)5 years£2,0003.80% AER fixed
 Northern Rock5 years£13.75% AER fixed

What are the term lengths on fixed rate bonds?

Fixed-rate bonds come in different terms. You may find a 1 year fixed rate bond, 2 years, and even up to 7 years.

Fixed-rate bond are divided into short and long term;

Short-term fixed rate bonds

These fixed-rate bonds last for weeks or months. They could be as short as one to three weeks, or one to 18 months. The longer your period of bank bond the higher the interest rate you get. But it’s best to compare fixed rate bonds if you need to find a good rate on a shorter term.

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Long-term fixed rate bonds

These are long-term investments and can last between five to seven years. If you’re comfortable with this and you want to keep your money away for this long, it’s best to contact a financial advisor. They’ll offer you details of all your investment options.

How to cash in matured fixed rate bonds

  • Before you close a mature account, you have to first, fill out a form issued to you by your financial institution.
  • Your financial institution will send you a cheque in the post, or to transfer the money into your bank account.
  • You have to decide on what to do with the money: Whether to reinvest or cash out. If you’re not sure what to do, you may need to speak to a financial advisor.

Pros and Cons of of Fixed Rate Bonds


Below are the most common benefits of fixed-rate bonds.

  • There’s minimal risk involved with fixed-rate bonds
  • Offers flexibility of an instant access account: you can withdraw your money and put it in a better account with a higher rate
  • You are aware of the exact amount of interest you’ll earn on your deposit and for how long.
  • Great interest rates compared to protected savings tools 
  • Fixed-Rate bonds help you develop a better financial plan


Some of the major limitations of fixed-rate bonds are;

  • You don’t have easy access to your money 
  • might have to pay in a lump sum at the start
  • Investors who decide to withdraw their bonds prematurely are subject to penalties.
  • These bonds prove to be a suitable savings option only if investors decide to stick to the rigid lock-in period.
  • Investors are confined to interest rate risk.
  • Often bonds with a longer-term accompany the risk of eroding bond value. Such a risk becomes inevitable in a market where the inflationary rate keeps increasing each year.
  • Almost all financial institutions offer this bond.
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When you compare the fixed-rate bonds highlighted in this article, you’re certain to find the best bond rates that suit your financial goals.



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