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If you are happy to put your money into a savings account and leave it alone for a couple of years, fixed rate savings bonds could earn you more interest than a standard savings account.
Traditionally, fixed rate savings accounts run for 1-5 years and pay a guaranteed rate of interest for the duration of the term. However, occasionally they are offered over a longer period or with a flexible interest rate linked to a measure like the Bank of England base rate.
The best fixed rate savings accounts can offer many times more interest than most instant access saving accounts, over a number of years this can make a big difference to your return.
You can compare fixed rate bonds using our best fixed rate bond savings account comparison table, so whether you're looking for one year fixed rate savings bonds or 5 year fixed rate bonds you can filter the results to find the best on the market that meet your requirements.
However, before you get drawn in by the best interest rates on fixed savings you need to take a step back.
If you decide to lock your money into a fixed rate savings account you're unlikely to be able to access your money during the fixed rate savings term. Most accounts will prohibit you from making any withdrawals mid-term, and those that do are likely to either apply an interest penalty, or force you to close the account early so you forgo your higher rate of interest.
For this reason you'll need to be sure that you won't need access to your money before the end of the fixed interest term. This may mean going for a bond with a shorter term so you have less time to wait before being able to access your money. Alternatively, it may mean opting for a notice savings account, or instant access savings account instead so that you have more flexibility.
Another thing you'll need to consider when weighing up how long you should lock your money away for is what interest rates are likely to do in the meantime.
If interest rates rise during your fixed rate term then you could miss out on the potential to work your money harder, however if interest rates fall you would be better off as you'd be earning a higher rate than would otherwise be available on even the best fixed rate savings.
No one can accurately predict what's going to happen to interest rates so it's simply a case of balancing your options, taking the time to compare fixed term savings accounts, making a choice that seems right for you and securing the best fixed rate bond you can at the time.
To make sure you get the best rate on your savings read our 6 Top Tips to Guarantee You Get the Best Rate on Your Savings .
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