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Compare the best 3 year fixed-rate bonds
Discover how to find the best 3 fixed-rate bonds and how this compares to other savings accounts.
How to find the best 3-year fixed-rate bonds
The only real factor you need to consider when choosing the best 3-year fixed-rate bond is the interest rate on offer.
You can find the best-paying 3-year fixed-rate bonds using any price comparison website.
There are other differences, including customer service and terms regarding early withdrawal of your funds, but for most savers these pale in comparison to the interest rate on offer.
Which is better: bonds or ISAs?
These two savings mechanisms are similar in most ways.
Although bonds are a contract where you agree to lend money to a third party and ISAs are a traditional savings account, they both offer similar interest rates and they both prohibit you from withdrawing your money early.
A key difference is the limits on the amount of money you can deposit. With ISAs, you’ll be given an annual limit (it’s £20,000 in the 2020/21 tax year). With fixed-rate bonds, there may be a maximum savings amount applied by the savings provider.
Another difference is you won’t pay tax on savings interest earned within an ISA. This isn’t as much of a big deal these days though. After all, with the introduction of the personal savings allowance, basic-rate taxpayers and higher-rate taxpayers can earn £1,000 and £500 of tax-free savings interest per year respectively. So, now it’s just the country’s highest earners who would have to pay significant interest on savings either way.
Pros and cons of fixed-rate bonds
Pros
- Earn interest on your savings.
- You can deposit more money compared to an ISA.
Cons
- You may have to pay tax on interest earned.
- To get the best rates, you’ll have to lock up your funds for a few years.
Bottom line
If you’re willing to lock up your money for a few years, fixed-rate bonds are a good tool for saving a lot of money.
Frequently asked questions
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