Fixed bond interest rates rise by 30 per cent since January


Savers who can put their money away for the long term are able to earn 30 per cent more than they would six months ago, according to analysis by Telegraph Money.

Those willing to put their money into fixed rate bonds are being rewarded with significantly higher interest rates, with Paragon Bank leading the best buy tables on their:

  • One-year fixed bond
  • Two-year fixed bond
  • Three-year fixed bond
  • Five-year fixed bond

With interest rates on fixed savings bonds creeping up over the past few months, predictions of further increases are being made by many in the finance industry.

This will come as promising news to savers who are currently struggling to beat inflation, which at the time of writing is 2.6%

What exactly are the interest rates?

To set the scene, the highest performing fixed bonds gave the following interest rates in January 2017, all provided by app-based challenger bank Atom:

  • Atom Bank One-year fixed bond 1.4% gross AER
  • Atom Bank Two-year fixed bond 1.6% gross AER
  • Atom Bank Three-year fixed bond 1.75% gross AER
  • Atom Bank five-year fixed bond 2.01% gross AER

At the time of writing, the following providers are leading the Moneyfacts best buy table:

  • Paragon one-year fixed bond 1.85% gross AER
  • Paragon Two-year fixed bond 2.05% gross AER
  • Paragon Three-year fixed bond 2.1% gross AER
  • Paragon Five-year fixed bond 2.45% gross AER

The three-year fixed bond now comes close to the interest rate of the National Savings & Investments (NS&I) Investment Guaranteed Growth Bond, which was introduced earlier this year in April. Whilst the NS&I bond offers a similar rate, it is worth noting the following differences:

Maximum deposit allowance:

The NS&I bond allows up to £3,000 to be saved, whereas the Paragon Bank bond has a maximum limit of £100,000.


The NS&I bond can be accessed at any time before maturity, however a charge equal to 90 days of interest will be applied. The Paragon Bank bond cannot be accessed before maturity.

How long will the rates stay like this?

Whilst inflation rates in general are predicted to rise somewhat, those who don’t want to miss out should consider acting quickly. Just two weeks prior to the time of writing, Atom bank was at the top of the best buy tables for all four fixed rate bonds. In just a matter of days, Paragon Bank has overtaken, and could just as quickly be overtaken themselves. Rachel Springall, Moneyfacts spokesperson, commented: “Something this good isn’t guaranteed to last very long, so savers would be wise to act fast if they want to benefit from such an attractive deal.”

With inflation predicted to rise as high as 4% by the end of the year, the rates offered by these fixed bonds won’t beat it. But it could lighten the blow considerably compared to other savings accounts available. Those looking to beat inflation may wish to consider other options, including switching from saving to investing. Whilst this could potentially offer a better return, investments carry risk to your capital, and you could end up with less than you originally had.

For more information about saving or investing, don’t hesitate to contact us on the number at the top of the page.