Fixed Rate Bonds for £85k

DoneWorking

Best current option is 
Secure Trust Bank

One Year at 2.26%

Anyone used this bank

Are they ok

Any other suggestions welcome

refluxer

Are you likely to need all of that money at once in a year's time or any time beyond that ? If not, in the current climate of rising interest rates, I would be tempted to put that in a high interest easy access account (eg. Chase @ 1.5%), split it into chunks and take out 1 year fixed rate savers at different points throughout the year. A 6 month fixed rate @ 2% with Shawbrook would be another option, either for the whole lot or a portion of it.

DoneWorking

I'm already maxed out on Chase

and another bank with a reasonable interest rate

The money for the bond is not needed any time soon

But as you say interest rates could increase again 

Albermarle

Secure Trust Bank — MoneySavingExpert Forum

refluxer

It's a tricky one for sure. There are obviously no guarantees, but I think creating this alternative type of 'savings ladder' works well when rates are increasing and can enable you to take advantage of the best rate at the time.

In more stable times, you would create a traditional savings ladder by splitting the money and fixing each portion at the same time for increasingly longer periods (eg, 1 year, 2 years etc) but in the current climate of increasing rates, spitting larger sums into smaller chunks and taking out smaller fixes (eg. 6 months or a year) with each periodically throughout the year is another way of doing it. What you don't want though, of course, is the bulk of the money sat in a low interest account in the meantime. It's a tricky balancing act and may even just boil down to how 'hands on' you want to be in order to get the best rates. You also need to try and anticipate when rates start to plateau or fall, at which point either locking away for longer periods or consolidating your money into larger chunks may become more beneficial.

To give you an idea of how fast things are moving, the best 1 year Fixed Rate on 6th April was 1.85%. The next BoE base rate meeting is 16th June and further rises are predicted throughout the year. 

CheekyMikey

I have used Secure Trust in the past for fixed rate bonds…they’re absolutely fine. I’ve currently got £100k in Chase and Zopa that can be fixed for a year and I’m looking to do it in chunks as Refluxer described…I think better 1 year rates will happen but you’ve got to start sometime or you could always be waiting for that better rate and do nothing. I’ll probably do Secure Trust this weekend as I know they’re ok…

DoneWorking

Taking into account the £85k protected funds issue is there an optimum sum to invest in these higher interest bonds and an optimum time gap between opening new bond

For example open a bond every three months and put in say £30k
Up to £85k in each high interest bond with same bank

Thrugelmir

A listed company been around since 1952. 

https://www.hl.co.uk/shares/shares-search-results/s/secure-trust-bank-plc-ord-gbp0.40

refluxer

DoneWorking said:

Taking into account the £85k protected funds issue is there an optimum sum to invest in these higher interest bonds and an optimum time gap between opening new bond

For example open a bond every three months and put in say £30k

Due to the fact that the future interest rates of all the easy access and fixed rate accounts involved are unknown, it's a difficult question to answer. I would say base your decision on the amount of time you want to spread these accounts over and the effort you're willing to put in. 3 x £30k or maybe 4 x £20k wouldn't involve too much effort.

If you're already maxed out on Chase to store the initial pot, one option after you've taken out your first Fixed Rate could be to put the second chunk into a notice account (eg. OakNorth @ 1.55% with 90 days notice) and then request a withdrawal straight away, which would effectively make it a 3 month bond at 1.55%, which is a decent step up from the next-best Easy Access rate (1.25%) when Chase isn't an option. Going down this route would take a bit more work though and require some forward planning to ensure you can access the cash when you need it.

DoneWorking said:

Up to £85k in each high interest bond with same bank

You only get £85k FSCS protection per financial institution not per account, so don't invest more than £85k in total in any one institution.

DoneWorking

refluxer said:

DoneWorking said:

Taking into account the £85k protected funds issue is there an optimum sum to invest in these higher interest bonds and an optimum time gap between opening new bond

For example open a bond every three months and put in say £30k

Due to the fact that the future interest rates of all the easy access and fixed rate accounts involved are unknown, it's a difficult question to answer. I would say base your decision on the amount of time you want to spread these accounts over and the effort you're willing to put in. 3 x £30k or maybe 4 x £20k wouldn't involve too much effort.

If you're already maxed out on Chase to store the initial pot, one option after you've taken out your first Fixed Rate could be to put the second chunk into a notice account (eg. OakNorth @ 1.55% with 90 days notice) and then request a withdrawal straight away, which would effectively make it a 3 month bond at 1.55%, which is a decent step up from the next-best Easy Access rate (1.25%) when Chase isn't an option. Going down this route would take a bit more work though and require some forward planning to ensure you can access the cash when you need it.

DoneWorking said:

Up to £85k in each high interest bond with same bank

You only get £85k FSCS protection per financial institution not per account, so don't invest more than £85k in total in any one institution.

Thanks

That's very helpful advice