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If you’re saving for the long term, 4 year savings bonds are a great way to guarantee a fixed return for your money but you need to make sure you get the best rate possible. Here’s how to find the best 4 year fixed rate savings accounts.
If you want a home for your savings that guarantees a set return with little risk to your cash then a 4 year fixed rate bonds investment is a good choice.
However taking the time to find the best account is essential; here’s what you need to consider.
Is choosing a fixed rate the best move?
Committing to 4 year bond fixed rate is significant financial decision and one that shouldn’t just be made without looking at your alternatives.
Essentially you are entering in to an agreement with the bank or building society that gives them permission to hold onto your cash for 4 years in exchange for a set amount of interest.
While this may be a higher interest rate when compared to other cash accounts, if interest rates start to rise after you’ve deposited your savings your fixed rate could soon start to look a lot less appealing.
Of course if rates were to drop then your fixed return would seem an even better deal.
Are you happy to lock away for 4 years?
A lot can happen in a 4 year period, governments can change and Olympic Games can come and go, so you need to be happy that you won’t need your savings for the full 4 year period before committing to a 4 year fixed rate bonds savings account.
If you are undecided, then opting for a shorter term bond could be a better option.
Although you are unlikely to get as high an interest rate from a 2 or 3 year bond, if you opt for 4 year fixed rate bonds only to have to withdraw your cash mid way through the term you’ll have to forfeit a substantial amount of interest as a result. Many 4 year bond providers prohibit you from drawing on your money at all so the likelihood you’ll need access is something you need to seriously consider.
How to compare accounts
Before you deposit your hard earned cash in a fixed rate bond for 4 years you need to compare the different accounts on the market to make sure your 4 year fixed rate bond’s AER is the highest possible.
This is because the AER or interest rate is what determines exactly how much money your savings will earn for the 4 years they are held in the fixed rate bond.
To find the best 4 year fixed rate bonds savings interest rate use our 4 year bond comparison table.
As your interest rate is only fixed for a 4 year period it is also vital to make a note of when your bond will end. This is because the interest rate offered by the bank is likely to plummet once the 4 year term ends and you will need to look for a new home for your savings.
