2 Year Fixed Rate Bonds - Are They Worth It?

How you choose to invest your money is heavily dependent on the amount you have available to put into a scheme. Smaller amounts of money generally thrive in a savings account as these kinds of accounts offer great interest rates in proportion to the amount you are investing. 

However, if your savings exceed the limit that your savings account are willing to pay interest on, you could be cheating yourself out of a significant profit and a 2 year fixed rate bond might be the answer you have been looking for. 

2 year fixed rate bonds are a popular option for an investor who does not require immediate access to their savings, yet may require their funds in the near future. They also have a 100% guarantee for the duration of the bond and can live alongside your current account, so there’s no need to worry about juggling around your day-to-day transactions.

With a 2 year fixed rate savings account, you know how much interest you'll earn over two years. The interest rate of your fixed rate savings is secured for 24 months, regardless of whether the Bank of England changes the base interest rate.

As long as you don't withdraw your money until the policy matures, you'll get all your money back plus the interest you've earned. In the event that you do need to withdraw your cash before the 2 years, some providers do allow withdrawals, but often with a heavy penalty such as a reduced interest rate or a charge. It’s a good idea to check this out before you take out the policy to plan for all eventualities. 

Is A 2 Year Fixed Rate Bond Right For You?

You don’t need to access your savings for two years.

You want to know how much interest you’ll earn at the end of the two-year term.

You want to protect your savings from a possible reduction in interest rates over the next 24 months.