Compare fixed rate bonds

Choose a fixed rate bond with our best bond rates to get returns on your savings over a set term

24 results found, sorted by shortest term. How we order our comparisons. Commission earned affects the table's sort order.
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Fixed term

Skipton 17 Month Fixed Rate e-Bond Issue 164
Term
17 months
Account type
Fixed rate bond
Open with
£500
Interest rate
0.8% AER fixed
Protection scheme
FSCS
Interest is paid on the anniversary of account opening and on maturity. Withdrawals not allowed. Check restrictions on paying in.
Rate Tiers
Gross rateGross rateAER rateAER rate
Excluding bonusIncluding bonusExcluding bonusIncluding bonus
£5000.8%0.8%0.8%0.8%
Eligibility
Maximum Initial Deposit£1,000,000
Minimum Initial Deposit£500
Minimum Age16 years
Permanent UK Resident

Last updated: 20 May, 2021

What are fixed rate bonds?

Fixed rate bonds are a type of savings account, and are often known as savings bonds.

They tie up your money for a set length of time, known as a 'term'. You'll need to be sure you won't need your money during the term. Then, you're paid a fixed interest rate for the duration of the term of your fixed rate bonds.

You're guaranteed this interest rate until your bonds 'mature', and it's usually higher than what you'd get with an easy access account. That's because the bank knows it has access to your money for a set period of time and you're not suddenly going to withdraw it.

An important thing to note about fixed rate bonds is that you can often only deposit your money into them once. So you'll need to put it all in in one go.

What types of fixed rate bonds are available?

There are two main types of fixed rate bonds:

  • Fixed rate savings bonds. These give you a fixed interest rate for the term of the bond.

  • Tracker rate bonds. These give you a fixed interest rate, at an agreed level above the Bank of England base rate. For example, it could offer a rate of 1% higher than the base rate, until the end of the term. At the current base rate of 0.10%, you'd be offered a rate of 1.10%

When you compare fixed rate bonds, you'll be able to find the best bond rates for your financial goals.

You might also like to look at another type, called a tax-free fixed rate ISA bond.

With the best fixed rate bonds, what term lengths can I get?

Here are the typical term lengths offered, and the interest you may be able to earn.

Updated 20 May 2021
Term length Interest rates (up to)Early withdraw penaltyMinimum investment
1 year0.50%No interest£1,000
2 year1.0%No interest£1,000
3 year1.25%No interest£1,000
5 year1.50%No interest£1,000
7 year1.75%No interest£1,000

How is interest paid on fixed rate bonds?

Interest is paid out in two ways:

  • Fixed. Although less common, some fixed rate bonds pay a fixed rate of interest on a monthly basis. This means that you'll earn the same amount of interest every month for the term of the bond. Often you can have the interest paid into a separate account and use it as income.

  • Compounded. Most fixed rate bonds, your interest is paid out every year. This means you can benefit from compounding interest over time. Compounding interest is where the interest gets added to the initial amount invested. So every year you'll earn interest on a larger sum of money.

Other fixed rate bonds only pay the interest at the end of the term when the bond matures.

Be aware that any interest you earn from a fixed rate bond that is in excess of your Personal Savings Allowance will be taxable. The Personal Savings Allowance for basic rate taxpayers this is £1,000 and for higher rate taxpayers £500 for the 2021/2022 tax year.

However, those earning £17,570 or less in the 2021/22 tax year get an additional £5,000 tax-free interest, known as the 'starting rate'. Those earning more than £12,750 are also eligible for the starting rate, but the allowance decreases by £1 for every £1 of additional income over £17,570.

What happens when the term our fixed rate bond ends?

When your term ends, your bond has 'matured'. About a month before this happens, you'll be informed by your provider.

Usually you'll be given you a few options to think about:

  • Reinvest all the money

  • Reinvest all the money and add more

  • Reinvest some of the money, and withdraw some

  • Cash in savings bonds and close the account completely.

How to find the best bond rates

When you're looking for the best fixed rate bonds, there are a few things to think about. Before you start comparing the best bond rates, ask yourself the following questions:

  • How long can you leave your money untouched? Some fixed rate bonds don't let you access your cash until the end of the term. Check carefully.

  • What's the interest rate? The best fixed rate bonds come with higher rates of interest. This means that if you find the best bond rates you'll get more for your money.

  • How much do you want to save? Some fixed rate bonds can be opened with as little as £1 whereas others need a lot more.

  • How often do you want your interest to be paid out? The best fixed rate bonds let you choose whether to have the interest paid yearly or monthly.

Are bonds the best fixed rate savings option?

Usually, fixed rate bonds offer better interest rates than you'd get with other, more accessible, savings accounts. That's the main reason people have fixed rate bonds - because they feel they're the best fixed rate savings option available. You can usually get a decent amount of interest on a large sum of money.

The other good thing is that you can have as many fixed rate bonds as you like. Just remember that with fixed rate bonds, you often can't take any money out, or put any money in, during the fixed term. And you'll have to stay on top of how much you're earning in interest in case you exceed your Personal Savings Allowance. There's more on this below.

How to cash in matured fixed rate bonds

Here's what to do when it's time to cash in your matured fixed rate bond.

  • If you want to close a mature fixed rate bond account, you'll need to fill out a form given to you by your bank.

  • Wait for your bank to send you a cheque or transfer the money into your account

  • Decide what you'd like to do next. If you want to reinvest your money, you'll need to compare the best fixed rate bonds and all other savings accounts, or speak to a financial advisor.

How long do fixed rate bonds take to cash?

The best fixed rate bonds providers should be able to cash in your savings for you quickly. It usually takes about eight days to get your money.

If your bank gives you the option to have the money put straight into your account, this is usually the best option. It means that if you see a good fixed rate bond account anywhere else, you'll be able to act fast. But, if you're waiting for a cheque, you might not be able to. Most accounts need an immediate deposit when you open them.

Pros and cons of investing in fixed rate bonds

Pros

  • Peace of mind
  • Guaranteed interest rate for the term of the bond
  • minimal risk

Cons

  • You lose access to your money for the term of your bond
  • You're stuck in an interest rate even if interest rates rise during the term of the bond
  • Requires you to pay in a lump sump

Are fixed rate bonds covered by FSCS?

Most savings providers are registered with the Financial Services Compensation Scheme (FSCS). This means you can relax knowing your money's protected.

FSCS protects the customers of financial services firms that go bust. If the company you've been dealing with has failed and can't pay claims against it, FSCS steps in to pay compensation.

But be careful how much you save with each provider. The protection limit is £85,000 per person per banking license.

Often many banks operate under a single banking licence, which means that you'll only be covered up to £85,000 in total if you have accounts with different providers under the same license.

Are there any alternatives to savings bonds?

Yes, there are alternatives to bank bonds if you want to invest your money. Ideally you should find the best fixed rate savings out there.

You could look at peer to peer savings accounts which can give you a fixed rate of interest for an agreed term. The interest is usually higher than you'd get with even the best bond rates. But the downside is that your money isn't protected under the Financial Services Compensation Scheme and it can be risky.

Other options when you're looking for the best fixed rate savings include fixed rate ISAs and high interest current accounts.

Fixed rate bond FAQs

How much money do I need to open a fixed rate bond?

This can vary from £1 up to £50,000. You can use our table filters to find a savings account based on how much you have to open it with.

Can I open a fixed rate bond online

Yes. Just like any savings account, you can open a fixed rate bond online, or by visiting a branch of your preferred bank or building society

Can I have more than one fixed rate bond?

Yes, but make sure you keep some money accessible in case of an emergency. Read this guide for help choosing the right savings account.

Can I have a fixed rate bond if I have bad credit?

Yes, your finances are not checked when you open a savings account. If you need help choosing the right savings account, read this guide.


About our fixed rate bonds comparison

Who do we include in this comparison?

Our comparison tables include providers we have commercial arrangements with. The number of listings in our tables can vary depending on the terms of those arrangements, as well as other market developments. They are all from providers regulated by the Financial Conduct Authority (FCA).

Here is more information about how our website works.

How do we make money from our comparison?

We have commercial agreements with some of the companies in this comparison and get paid commission if we help you take out one of their products or services. Find out more here.

You do not pay any extra and the deal you get is not affected.