Fixed rate bonds provide potential to earn 10x base rate

Over the last year, the financial sector has witnessed some extremely turbulent times, beginning with the credit crunch and moving into the recession. This has made us all more aware of our financial well-being, encouraging people to become more frugal with spending and consider their futures.

Last year, The Bank of England's base rate peaked well above average, so it's no surprise that people were benefiting from high interest rates on their savings accounts. But as inflation became almost unavoidable, the Bank of England lowered rates on a number of occasions, eventually marking the lowest rates ever recorded of 0.5% - the level it remains at today.

Although many have benefited from this on one side of the market - involving mortgages and loans, savers are suffering, as many banks are struggling to offer attractive interest rates. But the fact is that if you choose your account wisely, you can earn up to 10 times the current base rate for a guaranteed period of time.

Fixed rate bonds allow savers to lock in at a rate for a specified term, providing them with a guaranteed predictable income from their investment. Barnsley Building Society are currently offering savers 5% on investments between £100 and up to £500,000 on its three year fixed term bond.

Although the base rate is likely to increase over time, 5% is a very respectable rate and would even have been so before the financial crisis first surfaced.

Alternatively, savers may wish to add an element of risk and use their cash to invest into bonds. These accounts offer projected rates that are dependent on the performance of the investment, but can potentially offer significantly higher returns that savings products.

There are several types of investments bonds available, each with different levels of risk, but if you would rather not risk your investment, but don't mind gambling the potential interest you could earn, you may be more suited to capital protected investment bonds.

To remain completely protected against your initial investment, keep your account below £50,000 and choose a financial institution that is a member of the Financial Services Compensation Scheme, as this will keep your money safe even if the firm you invested in were to go bankrupt.