Tesco Bank's fixed-rate bonds let you lock your money away for up to five years, with interest rates on these savings products ranging from 1.16% to 1.85%.
So is it worth putting your hard-earned savings into Tesco fixed-rate bonds, or are there better interest rates to be found out there?
We'll start by running through the rates you can get on Tesco bonds, which either pay our interest annually or monthly (depending on your preference).
Tesco one-year fixed-rate bond
|
Annual Interest rate (AER) |
Monthly interest rate |
Minimum deposit |
|
1.16% |
1.15% |
£2,000 |
Tesco 15-month fixed-rate bond
|
Annual Interest rate |
Monthly interest rate |
Minimum deposit |
|
1.20% |
1.19% |
£2,000 |
Tesco two-year fixed-rate bond
|
Annual interest rate |
Monthly interest rate |
Minimum deposit |
|
1.45% |
1.44% |
£2,000 |
Tesco three-year fixed-rate bond
|
Annual interest rate |
Monthly interest rate |
Minimum deposit |
|
1.55% |
1.54% |
£2,000 |
Tesco five-year fixed-rate bond
|
Annual interest rate |
Monthly interest rate |
Minimum deposit |
|
1.85% |
1.83% |
£2,000 |
Best fixed-rate savings
Now let's see how Tesco's fixed-rate bonds compare to its rivals. At the time of publishing, these are among the top savings rates we could find on the market. We've reminded you of the equivalent Tesco rate in the column at the end.
|
Provider and account |
Duration |
Interest rate (AER) |
Equivalent Tesco rate |
|
Charter Savings Fixed-Rate Bond |
1 year |
1.79% |
1.45% |
|
Axis Bank Fixed-Term Deposit |
2 years |
1.90% |
1.45% |
|
Axis Bank Fixed-Term Deposit |
3 years |
2% |
1.55% |
|
United Bank Fixed Term Deposit |
5 years |
2.36% |
1.85% |
Verdict
Going back a few years, Tesco fixed-rate bonds were among the most competitive on the market.
But now, the bank is far behind the top savings providers on the market.
As long as you're sure any savings institution you choose is covered by the FSCS, which guarantees savings pots of up to £85,000 will be protected even if a bank goes under, there's no reason not to put your money with one of Tesco's more generous rivals.
Make sure you check out our regularly-updated round-up of the best savings rates on the market to get a better idea of what's out there.
Fixed-rate bonds: before you apply
We should stress that choosing a fixed-rate savings bond shouldn't be done on a whim.
First of all, you need to be sure you won't need access to those funds for the duration of the bond – remember, this could be anywhere up to five years – as your money is locked away.
Some savings institutions will charge you hefty penalties for withdrawals while others, like Tesco Bank, simply won't allow you to do so outside of exceptional circumstances (such as bankruptcy or death).
The longer you lock your money away, the better the saving rate you'll likely get, but the bigger the commitment you're making.
With the above in mind, you also need to be confident the savings rate you're getting is competitive.
The last thing you'd want is to come across a savings bond with a better rate advertised the day after you've locked your funds away.