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Fixed rate bonds

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A fixed term bond can offer a long term solution for your savings, with an interest rate guaranteed for a set length of time. If you're investing a lump sum you could find a better return if you lock your money away.

Fixed term bonds with a higher interest return

A fixed rate bond means you have to lock your savings away for a set term without access, however for foregoing access to your cash you can earn more interest as a result.

1 & 2 year fixed rate bonds

Ranked in order of Interest Rate (AER)

Minimum
opening balance
Interest rate
(AER)
Manage your
account
Withdrawals
allowed
Term
Additional
deposits

2 Year Fixed Rate Bond

£1,000 2.21%
Online 2 years

Start Saving

Account Detail Provider Info

Available Online Only. Deposit between £1,000 to £250,000 for TWO YEARS in ONE PAYMENT and benefit from a guaranteed savings rate. Annual or Monthly interest options available. Sole or Joint Accounts. Restricted to UK residents 18 years or older. No additional deposits, withdrawals or closure during term.

Vanquis Bank is a UK bank with operations and call centres in London, Chatham, Bradford & Newcastle, & is part of the Provident Financial Group, a FTSE 250 company founded over 130 years ago. Vanquis Bank is regulated by the FSA & the first £85,000 of savings (£170,000 for joint accounts) is protected by the FSCS.

2 Year Fixed Rate Deposit Account

£2,000 2.00%
Post
Phone
Online 2 years

Visit site

Account Detail Provider Info

Available online only. Deposit between £2,000 to £500,000 in one payment and benefit from a guaranteed savings rate. Annual or monthly interest options available. Sole or joint accounts. Applicants must be UK residents 18 and over. Penalty for early withdrawal.

United Bank UK was formed from the merger of the UK branches of two Pakistani banks, United Bank Limited & National Bank of Pakistan, who had been operating in the UK since the mid-1960. UNB is regulated by the FSA & the first £85,000 of savings (£170,000 for joint accounts) is protected by the FSCS.

18 Month Fixed Rate Bond

£5,000 1.99%
Branch
Post 18 months

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Account Detail Provider Info

Minimum deposit £5,000. No early closure, additional deposits or withdrawals permitted. Interest paid monthly or on maturity.

The Principality is a mutual building society, founded in 1860, and is the UK’s 7th largest building society. They are based in Cardiff, Wales and have 52 branches across Wales & the Borders with over 500,000 customers.

3+ years fixed rate bonds

Ranked in order of Interest Rate (AER)

Minimum
opening balance
Interest rate
(AER)
Manage your
account
Withdrawals
allowed
Term
Additional
deposits

5 Year High Yield

£1,000 2.56%
Online 5 years

Visit site

Account Detail Provider Info

Available Online Only. Deposit between £1,000 to £250,000 in one payment and benefit from a guaranteed savings rate. Annual or monthly interest options available. Sole or joint accounts. Restricted to UK residents 18 years or older. No additional deposits, withdrawals or closure during term.

3 Year High Yield

£1,000 2.51%
Online 3 years

Start saving

Account Detail Provider Info

3 Year Fixed Rate Deposit Account

£2,000 2.25%
Post
Phone
Online 3 years

Visit site

Account Detail Provider Info

Available Online Only. Deposit between £2,000 to £500,000 for THREE YEARS in ONE PAYMENT and benefit from a guaranteed savings rate. Annual or Monthly interest options available. Sole or Joint Accounts. Restricted to UK residents 18 years or older. No additional deposits, withdrawals or closure during term.

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Fixed rate bonds FAQs

Do I have to pay tax on a fixed rate bond?

Answer: The interest earned on fixed rate bonds is taxable, so it’s important to take this into account when calculating how much interest you’ll receive. You may wish to consider a fixed rate ISA instead, as any interest you earn is yours to keep and won’t be taxed.
What happens when my bond matures?

Answer: You'll typically be contacted 30 days before the bond is due to mature, and you'll then be able to arrange to transfer the money to another account.
Will I get the advertised rate?

Answer: Every customer will get the advertised rate on a fixed rate bond as long as they deposit the required amount. It’s important to check the minimum deposit as these can vary greatly between accounts.

Understanding Savings Accounts

What is a fixed rate bond?

A fixed rate bond is a type of cash savings account that will pay a fixed rate of interest for a set term. Usually you can pay into the bond only once when you open it and can’t make regular payments into it. You usually won’t be able to withdraw your money until that period is up, although some providers will allow you to do so in return for giving up a number of days’ interest. Interest is usually paid when the bond matures, and you’ll need to pay tax on the interest.

The rate of interest you’ll receive on your savings can be a fixed percentage or, less commonly, a fixed percentage above the base rate, known as a tracker bond.

A fixed rate bond may be the right account for you if you have a lump sum to save and do not need access to your money until the end of the term.

Key things to consider

It’s important to choose your bond carefully, and to check the terms and conditions before you open the account.

Opening a fixed rate bond locks in the interest rate, so if the Bank of England base rate were to fall significantly your interest rate would not fall with it, protecting your savings from falling rates. However, if the base rates were to rise then interest rate wouldn’t change – so potentially you could miss out on higher rates.

You’ll also need to consider how much access you’ll need to your money, and whether your account will allow you to withdraw any of it.

Our Savings Guide has more information on all types of savings accounts, including Fixed Rate Bonds.

Base Rate

The base rate is the benchmark interest rate set by the Bank of England. A lender's rate will almost always follow the Bank of England base rate- if it goes up or down, the lender's standard variable rate will also go up or down. Fixed rate accounts mean you don't need to worry about earning less interest if the base rate goes down as you've locked in your money at a higher rate, but if the base rate goes up you won't earn the higher rate of interest either. The base rate is an important thing to consider when you're deciding whether to fix your savings or not.

Fixed Rate Bond

A fixed rate bond allows you to earn a higher rate of interest by locking your money away for a set period of time, usually between 1 and 6 years. You usually won't be able to access your money during this time, but you could earn more interest than with an instant access account.

Fixed Term

If an account has a fixed term, this is the length of time for which you'll need to lock your money away to get the advertised rate. Some providers will allow you to withdraw some or all of your money before this term ends, but you'll usually be penalised with fees or a loss of interest.

Interest

This is the amount the financial institution that holds your account will pay you in return for saving with them. To find out how much your savings will earn, you can look at the AER- the Annual Equivalent Rate. Shown as a percentage, this tells you the rate of interest you will earn over the period of 1 year. The interest rate may be fixed, which means it will not change throughout the life of the account, regardless of whether the Bank of England base rate goes up or down. Alternatively, the rate may be variable and fluctuate along with the base rate.

Lump Sum

A one off amount of money an individual wants to pay into an account. Most accounts with a fixed term will require you to pay in a lump sum and will not allow you to make any more deposits, whereas instant access accounts may allow you to make regular payments into the account.