Fixed-rate bonds are savings accounts that lock away your funds for a set period of time, paying a guaranteed rate of interest throughout this term.
They can be a shrewd move in times when savings rates are on the way down – as they are now – since the rate you fix at will be unaffected until the term ends.
However, you’ll need to be sure you won’t need the cash in the meantime. Many accounts simply won’t let you access your savings until the term is over, while those that do allow early withdrawals will usually deduct your interest as a penalty.
This guide will cover:
What are fixed-rate bonds?
Fixed-rate bonds may also be referred to as fixed-rate savings accounts, or even fixed-term deposits – depending on the provider. In essence, they are savings accounts that pay a set amount of interest, and last for a set amount of time.
They commonly span from nine months to five years and, in theory, the longer the term you commit to, the higher the interest rate you receive.
However, this is not always the case – during times when rates are expected to fall over the longer term, savings providers will increase rates for shorter-term bonds in a bid to avoid paying over the odds in future.
You will often need to pay in a lump sum at the start of the term, rather than making regular deposits, so these accounts tend to suit those with larger amounts to save.
The interest can be paid annually, quarterly or monthly, depending on your provider. In some cases, interest may only be paid at the end of the term – if you have a large amount saved over a number of years, receiving all the interest in one go could mean you will exceed your personal savings allowance and have to pay tax on your returns.
The Best Buy tables show the best savings rates widely available in the market. This means certain accounts are excluded, including those that require minimum deposits of more than £25,000 or are available only to local or existing customers.
The data in these tables is provided by Savings Data Limited and is compiled using automated tracker tools and updates from savings providers. Savings Data Limited then manually checks the information and enters it into a database that feeds the live tables, which update every day.
The savings accounts shown are protected by the Financial Services Compensation Scheme (FSCS). The information in this article is intended for information purposes and should not be taken as endorsement or advice.
Use the table below to explore your options for a fixed-rate deal.