Where to get the best deal on fixed rate bonds

When talk turns to rate rises, it's usually a good time to look at fixing your savings rates and talk is definitely turning. Consensus in the City is that interest rates will move up as the Bank of England steps in to control inflation. So swap rates have been rising, pushing up interest on fixed rate bonds. The bonds, which pay a fixed rate for a fixed term, are available from a number of banks and building societies, as well as National Savings & Investments. In 24 hours last week, six banks came out with bonds paying more than 5%. For the first time in over a year, the best fixed rate bondsnow pay more than most of the top variable deals.

Fixed rate bonds: the best deals

Portman Building Society has a one-year bond for the over 50s that pays an impressive 5.25%. If you don't qualify, there's always an internet deal from West Bromwich at 5.2%. Or you can earn 5.16% at Birmingham Midshires. Norwich & Peterborough has a good two-year bond, paying 5.25%. If you want to fix for three years, you can get 5.25% with Bradford & Bingley's ebond; the small Heritable Bank offers 5.31%.

In The Times Money section, Rebecca O'Connor points out the drawbacks of fixed rate bonds: don't fix for too long in case you get a poor deal if rates move against you, and don't invest in a bond if you will need to withdraw your money within the term as harsh penalties could wipe out the benefits.

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