Swiss cash bonds: what you need to know in 2025

Cash bonds have long been a popular investment instrument in Switzerland. With the recent rise in interest rates, this traditional form of investment is regaining attention among private investors. It offers exactly what many investors value: a fixed interest rate over a defined period – ideal for those who prioritise predictability and stability.

What are the current market conditions? Which maturities are recommended, and what risks should you consider? Our guide answers the key questions about cash bonds and their role in the Swiss financial market.

What are cash bonds, and how do they work?

Definition and key principles

Cash bonds are fixed-interest debt securities issued directly by Swiss banks to their clients. When you purchase a cash bond, you lend a fixed amount to the bank for a set period. In return, you receive a guaranteed interest rate, typically paid out annually. At the end of the agreed term, your original investment is fully repaid.

Unlike bonds traded on the stock exchange, cash bonds are not listed, making them less liquid during their term. However, this also ensures a stable return, unaffected by market fluctuations. For investors looking to allocate funds over a predictable period, cash bonds offer an attractive alternative to traditional savings accounts.

How do they differ from other fixed-income investments?

The Swiss financial market offers various fixed-income products. Cash bonds stand out from savings accounts, term deposits, and exchange-traded bonds in three key ways:

Guaranteed interest rate: The interest rate is fixed at the time of purchase and remains unchanged throughout the term, regardless of market developments or central bank rate adjustments.
Direct issuance by banks: Unlike listed bonds, cash bonds are not traded on the capital market but are instead issued and held directly by the bank.
Predictable returns: With no price fluctuations and no option for early exit, investors can calculate their earnings precisely—provided they hold the bond until maturity.

These characteristics make cash bonds particularly appealing to risk-averse private investors who seek stable, predictable returns.

Maturities and repayment

Swiss cash bonds typically come with maturities ranging from 2 to 10 years. The principle is simple: the longer the term, the higher the interest rate. While some banks may offer shorter or longer durations, the focus remains on medium-term investment horizons.

Repayment is straightforward: at the end of the agreed term, investors receive their full capital back. The nominal value remains stable throughout, making this investment highly transparent. Interest payments are usually made annually and credited directly to the linked account.

Current interest rates and market trends

Since 2022, the Swiss financial market has seen a rise in interest rates, bringing cash bonds back into focus. Compared to the low-interest period, when they offered little advantage over traditional savings accounts, they now provide more attractive returns.

For investors with medium- to long-term financial goals, current interest rates offer opportunities to optimise returns. As each bank sets its own conditions, a thorough comparison of different offers is essential. The variations between providers can be significant and have a major impact on overall returns.

Bank	Maturities	Annual interest rate	Minimum investment
Zürcher Kantonalbank (ZKB)	2 to 10 years	0,35% – 0,75%	CHF 5’000
Raiffeisen	2 to 10 years	0,65% – 1,05%	CHF 5’000
PostFinance	2 to 10 years	0,05% – 0,20%	CHF 5’000
Basler Kantonalbank (BKB)	2 to 8 years	0,20% – 0,30%	CHF 1’000
Migros Bank	2 to 10 years	0,20% – 0,35%	CHF 1’000
Hypo Vorarlberg Bank (Schweiz)	2 to 10 years	0,75% – 1,35%	CHF 1’000

Important note: With cash bonds, it’s essential to pay attention to the fine print. Many banks offer tiered interest rates based on the investment amount – larger sums are often rewarded with better terms. The range of available durations can also vary significantly by institution. Additionally, be aware of possible fees and specific product features that may affect the overall result. For a well-informed decision, we recommend directly contacting various providers or using independent comparison websites that display current offers transparently.

Advantages and risks of cash bonds as an investment form

Advantages: predictability, fixed interest rate, and deposit protection

Predictability: Cash bonds are primarily valued for their stability. As long as the issuing bank meets its contractual obligations, no price fluctuations are expected. This makes financial planning easier, especially for investors looking for a predictable return.

Fixed interest rate: By opting for a fixed term with a guaranteed interest rate, investors receive a reliable return over the period, regardless of market fluctuations.

Deposit protection: The Swiss deposit protection system provides additional security for cash bonds, just like most bank deposits in Switzerland (up to a specified amount).

Risks: interest rate changes, inflation, and creditworthiness

Despite the predictability, certain risks should not be overlooked:

Interest rate risk: If market interest rates rise significantly during the term, investors typically cannot redeem their cash bonds early or sell them on the stock market to benefit from higher rates.

Inflation risk: In the event of prolonged high inflation, the real return is reduced, as purchasing power declines over time.

Credit risk: While Swiss banks are generally considered stable, investors placing larger amounts should assess whether the issuer risk is adequately diversified.

Tips for purchasing cash bonds in Switzerland

Before purchasing a cash bond, consider the following points carefully:

Choosing the duration: Longer durations usually offer higher interest rates, but tie up your capital for a longer period. Consider when you are likely to need the funds again.
Considering flexibility: Since cash bonds are not listed on the stock exchange, you can usually only withdraw your invested money to a limited extent or not at all during the term. Always ensure you have a liquidity reserve available.
Comparing providers: Conditions differ significantly from bank to bank. A thorough market comparison can lead to a much better return. Pay attention to any tiered rates based on the investment amount.

The role of cash bonds in a diversified investment strategy

For investors who prioritise broad asset diversification, cash bonds provide a reliable component in the fixed-income segment. A particularly effective approach is combining different durations – known as “laddering”. This strategy increases flexibility and simultaneously reduces the risk of being tied up for too long during unfavourable interest rate developments.

Further information on diversification and the bond market can be found in the Alpian articles on bonds and compound interest. For context-based investment decisions, we recommend the article Context is crucial for investments. Our glossary also provides a clear definition of government bonds.

Final assessment

Cash bonds present an attractive option for investors in 2025 who value predictable, fixed interest returns. Their strengths lie in precise predictability over a fixed term and low risk regarding price fluctuations. However, limited liquidity and potential interest rate and inflation risks should be considered – key factors for a well-informed decision.

Since interest rates and terms for cash bonds can vary significantly by bank, it is worth conducting a thorough comparison through independent platforms. As part of a diversified investment strategy, cash bonds can be a sensible choice if they align with your personal investment goals.

Swiss cash bonds: stable returns in uncertain times?