Working in the financial industry for over 30 years, Rachel Thrussell is the leading independent expert on UK savings products. Her views are constantly in demand from both the industry and the press.
I have looked at a comparison site that shows fixed term ISA rates paying a much higher rate than in your fixed rate ISA chart. They seem too good to be true. Have you any advice about these types of investment?
There are several fixed term ISAs available that claim to offer much higher rates than standard fixed rate ISAs, sometimes up to 8%, but you’re right in thinking that these rates seem too good to be true – they tend to be investment or innovative ISAs, rather than cash-based savings accounts, and the level of risk heightens accordingly. These accounts boast such high rates because they invest your savings in higher-risk enterprises, such as funding corporate loans, buy-to-let mortgages or peer-to-peer loans. Because of the higher risk involved, there’s no guarantee – if the end customer defaults on their loan and the company is unable to recover the funds, there’s the chance you could lose your investment. These firms aren’t covered by the Financial Services Compensation Scheme either, so if that were to happen, there wouldn’t be any recourse.
|1 Year Fixed Rate Bond||0.63%|
|2 Year Fixed Rate Bond||0.75%|
|3 Year Fixed Rate Bond||0.88%|
|4 Year Fixed Rate Bond||0.98%|
|5 Year Fixed Rate Bond||1.06%|
|27 October 2020|
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