The top 16 savings bonds

Fancy earning a straightforward, guaranteed rate of interest on your cash? Then a fixed rate savings bond may be for you - check out the best ones here.

While low interest rates mean fabulously meagre mortgage payments for those on tracker deals, they're also a double edged sword - as our savings earn next to nothing.

But with a little time and research we can maximise the amount of interest we earn. And a fixed rate savings bond could be the key.

Bonds

Fixed rate bonds are essentially savings accounts that lock your money away for a year or more. If you access your cash before the term is up, you'll be punished by being charged 90 days+ interest - negating any benefits you may have earned.

You need a lump sum to open one and you generally can't add to one, once it's open.

But if you have significant savings which you can afford to leave untouched for the full term, you'll earn a rate that will usually surpass any instant access savings account. And the best bit is, the rate is guaranteed - so you'll know exactly what your savings will earn, regardless of interest rate fluctuations.

Open one with £1+

And while most require a minimum lump sum of £500-£1k, some can be opened with a very modest £1+.

Let's take a look at the bonds on the market at the moment:

Top 1 year savings bonds

Provider	Account	Rate/AER	Minimum deposit
National Savings & Investments (NS&I)	1 year Guaranteed Growth Bond (Issue 48)	3.95%	£500
State Bank of India	Hi return fixed deposit	3.75%	£1k
Post Office	Growth Bond (Issue 10)	3.70%	£500
Julian Hodge Bank	Capital Millennium Bond	3.70%	£1k

Source: Moneyfacts

Top 2 year savings bonds

Provider	Account	Rate/AER	Minimum deposit
AA	Internet 2 year Fixed rate bond	4.35%	£500
Coventry BS	Poppy Bond	4.30%	£500
Birmingham Midshires	Internet 2 year fixed rate bond	4.25%	£1
Bank of Cyprus	2 year fixed rate bond	4.25%	£1

Source: Moneyfacts

Top one and two year bonds offer rates of up to 4.35% AER - which let's face it, isn't bad in the current savings world. But can we do better? How about if we lock our money away for longer?

Top 3 year savings bonds

Provider	Account	Rate/AER	Minimum deposit
ICICI Bank	HiSAVE Fixed rate account	4.70%	£1k
Yorkshire BS	3 year bond	4.65%	£100
Birmingham Midshires	3 year fixed rate bond	4.65%	£1
Halifax	3 year bond - Guaranteed Reserve	4.59%	£500

Source: Moneyfacts

Top 5 year savings bonds

Provider	Account	Rate/AER	Minimum deposit
Skipton BS	Fixed rate bond	5.35%	£500
Yorkshire BS	5 year fixed rate bond	5.30%	£100
Halifax	Web saver 5 year bond	5.25%	£500
Principality	5 year bond	5.15%	£500

Source: Moneyfacts

As you can see, if you're willing to lock that cash away for 5 years you can earn a very nice 5.35% AER with Skipton BS. Stash between £500 and £1m here and it'll be guaranteed to earn this juicy rate until November 2014. Not bad!

Which would I choose?

So there you have it - the best fixed rate bonds on the market at the moment.

But which one would I choose as a home for my cash?

Well, personally with interest rates being so low I wouldn't want to tie my money up for too long as let's face it; rates are bound to go up again relatively soon.

For this reason a two year bond, namely the AA's 2-year internet bond, paying 4.35%AER is one of the most attractive and certainly the longest duration I'd be willing to tie my cash up for.

But for simplicity I say you can't ignore the table-topping one-year bond from NS&I, paying a guaranteed 3.95% AER on sums of £500+, which incidentally is backed by the UK government.

Happy saving!

Use lovemoney.com to boost your savings

If you need a bit of a nudge to get into the savings habit, lovemoney.com can help.

First, adopt this goal: Build up an emergency savings pot

Next, watch this video: How to save when you've got no money

And finally, why not have a wander over to Q&A and ask other lovemoney.com members for hints and tips about what worked best for them?

More: 6 steps to saving big |The most consistent savings accounts