Chelsea Bonds and Infinity Bonds paying 27% – are they too good to be true?

We have a chunk of cash we want to tuck away for up to five years. I have seen two bonds advertised through Google. One is named Chelsea Bonds, the other is Infinity Bonds.

The Chelsea Bonds are offering a 22 per cent return, which seems far too high – is this anything to do with the Chelsea Building Society? Meanwhile the Infinity Bonds offer 27 per cent.

What is the best home for our cash, without needing access for a number of years and with Financial Services Compensation Scheme protection?D.B, via email

Too good to be true? A reader searching for the top fixed-rate bonds available came across adverts offering fully guaranteed bonds paying as much as 27%

Too good to be true? A reader searching for the top fixed-rate bonds available came across adverts offering fully guaranteed bonds paying as much as 27% 

George Nixon, This is Money, replies: It might not surprise you to hear that you should take Google adverts for fixed-rate bonds offering double-digit or even high single-digit returns with a big pinch of salt.

Search for ‘high interest bonds’, ‘best fixed-rate bonds’ or ‘guaranteed bonds’ and you’re greeted with adverts for official comparison websites, savings accounts and asset managers and high-risk investments advertised as safe. 

Indeed the Financial Conduct Authority has frequently sparred with Google over the last 12 months over adverts, with its former chief executive Andrew Bailey asking the search engine to help the FCA out and take the adverts down.

What did Google say? 

We asked Google about the adverts you came across. It said in a statement: ‘UK consumers often look online for help with financial decisions but there are businesses who purposely set out to mislead consumers. 

‘Protecting consumers and the credible businesses operating in this area is a priority for us, which merits careful rules and enforcement. 

‘We are also working with the FCA and other independent experts on a scalable and long term solution for us to ensure that consumers are protected.’

Whether these bonds you’ve seen advertised on Google are too good to be true or ‘just’ high-risk investments, neither of the companies are authorised by the FCA and it appears difficult to find out what your money is invested in.

And given the best five-year fixed-rate savings account currently pays 2 per cent, it seems a little far-fetched you’d find a ‘zero risk’ fixed-rate bond paying 22 per cent, as is advertised by Chelsea Bonds.

Infinity Bonds meanwhile advertises returns of up to 27 per cent paid monthly, which similarly sounds too good to be true.

As for your specific question about Chelsea Bonds, it is nothing to do with Chelsea Building Society. 

CBS merged with Yorkshire Building Society in 2010 and has been a trading name of it since then.

And given that YBS’s sole fixed-rate offering is a one-year deal paying 0.75 per cent, it is very unlikely they would be offering one, two, three and five-year bonds paying 2 per cent, 6 per cent, 8 per cent and 12 per cent.

Search terms like 'best fixed-rate bonds' return adverts for investments offering high returns, which may tempt savers worried about their money in a time of low interest rates

Search terms like ‘best fixed-rate bonds’ return adverts for investments offering high returns, which may tempt savers worried about their money in a time of low interest rates

The real website of Chelsea Building Society, which has been part of Yorkshire Building Society since 2010

The real website of Chelsea Building Society, which has been part of Yorkshire Building Society since 2010

Infinity Bonds meanwhile uses pictures of challenger banks Hampshire Trust Bank, Paragon Bank and Shawbrook Bank on its website. 

While these often offer some of the best savings rates available, the best way to find these are through their real websites or This is Money’s best buy tables

These high-interest bond websites also often like to use the badge of the Financial Services Compensation Scheme to try and reassure savers their money is safe, although there is no sign of these on the Chelsea Bonds or Infinity Bonds pages.  

The FSCS has its own website where you can check whether your money is protected up to £85,000.

As always, remember the two golden rules. If something is too good to be true, it probably is, and never put your money in something you don’t understand.

What are the best fixed-rate savings deals out there?

Now we’ve established these are two places you probably don’t want to put your savings, even if you could find out where they are actually going, where should you?

Savings rates have fallen over the last 12 months and two quick-fire Bank of England base rate cuts are not going to help matters. 

Since its second cut to interest rates on 19 March, average five-year fixed bond rates have fallen 0.08 per cent, two-year fixed bonds 0.07 per cent and one-year fixed bonds 0.05 per cent, according to Moneyfacts.

It is likely more cuts are coming, and experts have consistently warned that if you find a good savings rate from a bank you should lock into it as soon as you can.

Locking up your savings for longer can give you a better savings rate, but what are the best deals at the moment, and is it worth locking in for a long time?

Locking up your savings for longer can give you a better savings rate, but what are the best deals at the moment, and is it worth locking in for a long time?

One-year: 12-month fixed-rate bonds have actually held up fairly well since the Bank of England cut rates, and the last fortnight has actually seen new top-rate deals launched, in a boost for savers.

The best rate is offered by Hampshire Trust Bank, and pays 1.6 per cent on balances of £1,000 or more. Secure Trust Bank pays 1.58 per cent on the same balance. Both can be opened online. 

Longer-term fixed-rates: The best two and three-year fixed-rate bonds are both offered by Secure Trust Bank, and pay 1.68 per cent and 1.81 per cent respectively. 

Again, given this is a smaller bank any top fixed-rate deals offered by it may disappear fast. 

Oaknorth, Hampshire Trust, United Trust and RCI Bank offer the second best two-year fixed-rate at 1.65 per cent. United Trust’s offer can be opened online with £5,000 and the other three £1,000. 

The second-best three-year deals are offered by Investec and United Trust Bank, pay 1.8 per cent, and can be opened with £25,000 and £5,000 respectively.

Finally, there is a different name at the top of our five-year tables, with Sharia bank Gatehouse paying 2 per cent on balances of £1,000 or more. 

Being a Sharia bank means it pays an expected profit rate rather than interest, but in practice this works the same way. RCI Bank comes in second-place and pays 1.9 per cent on balances of £1,000 or above.

RCI Bank and Investec offer monthly interest options, while Oaknorth pays interest only on maturity. The rest pay interest annually.

But should you lock your money away?

While you say you are happy to tuck your money away for up to five years, some experts have warned against doing that given the way rates on longer-term bonds have fallen over the last 12 months.

And while one and two-year rates have held fairly strong under the circumstances, the same cannot be said for five-year savings accounts, which have fallen the most since the Bank of England cut its base rate for the second time in eight days.

While you can of course stash your money away for up to five years, doing so might not represent the best value for your savings.  

James Blower, industry expert and founder of The Savings Guru, said: ‘With only 0.42 per cent separating the best one and five-year rates, I cannot see any value for savers to tie up their savings beyond one year at present. 

‘I expect a volatile market so savers should secure any attractive rates quickly.’ 

THIS IS MONEY’S FIVE OF THE BEST SAVINGS DEALS

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