Fixed Rate Offers Declining

WOTSWOT

Albermarle said:

WOTSWOT said:

The idea of having to lock my money away for some time with no access at all does not sit easily with me, so most of my fixed bonds are in ISAs where there is nearly always provision for access, albeit at some significant penalty, depending upon the term.

The other consideration for me is the difference between instant and fixed rates. Not so long ago I seem to remember fixed rates were at some disadvantage, whereas now there seems to be little difference, slowly moving towards a trend where fixed rates are at an advantage.

Recently I have favoured 60 to 95 day notice accounts, where I still have good deals with DF, KRBS and RCI.
In particular RCI provided very competitive returns for some time after I funded and following their recent rate increase, at a time when all the competition is reducing rates, it looks as if that experience is about to repeat.

Traditionally fixed rates are normally better than easy access rates, as a reward for tying your money up for longer.
However over the last couple of years or so, this has been turned around due to expectations of interest rate cuts.
In the end these have come more slowly than expected, so with hindsight it would have probably better to stick with EA over that period.
Once interest rates stabilise and if it is perceived that they will stay that way, then the traditional reward of better rates for tying up your money for longer should re-emerge. 

I was toying with a 2y RCI bond at 5% last year and now regret not going for it.
The problem now is that rates may be on a long term decline and it is uncertain where they will settle.
Weighed against that is the world economy uncertainty and what is happening in the crazy USA.
I am sticking with short term bonds and notice accounts at the moment.

masonic

Concerns are now rising about tariff-linked recession in the US, which would probably spread, so you may look back in another year with more regret. The silver lining would be that the 1% interest rate Trump wants would probably happen in that scenario