Fixed-term accounts
Fixed-term savings accounts offer a guaranteed rate for a set period, usually in exchange for giving up access to your money.
In this guide
A fixed-term savings account - also known as a bond - is a secure way to lock in a guaranteed interest rate by committing your money for a set period, typically between 6 months and 5 years.
Unlike easy-access accounts, fixed-term bonds do not allow regular withdrawals, but they often reward savers with higher interest rates. The longer you lock in your savings, the better the rate may be, though this depends on market conditions.
Fixed-term bonds are ideal for savers who can set money aside for a known period and want predictable returns without worrying about rate fluctuations.
Key terms used in this guide7 terms
Definition
Fixed-term
The length of time, such as one, two or five years, that your money is locked in the account.
What is a fixed-term savings account?
A fixed-term savings account is a savings product where you agree to lock your money away for a set period — usually between 6 months and 5 years — in return for a guaranteed interest rate. During this term, you typically cannot withdraw funds without paying a penalty or losing interest.
These accounts are often referred to as fixed-term bonds. The term "bond" is widely used in UK savings because your deposit is tied up for a fixed period and provides a fixed return, similar to how a bond investment works.
Interest is usually paid annually or at The date a fixed term ends. The provider will usually return your deposit and interest or offer a new account at that point., but some providers offer monthly or quarterly payouts, which can be helpful if you want a regular income stream.
Key features of fixed-term savings accounts
Fixed-term savings accounts are straightforward products with clear rules and predictable returns. Here's what sets them apart:
Rate and term
A savings account that pays a fixed interest rate for a set term. Your money is usually locked away, and early access may be unavailable or reduce the interest you receive.Fixed interest rate
Your rate is locked for the entire term, protecting you from future rate cuts.
Defined term
Common terms include 1, 2, 3, or 5 years, though shorter or longer options may be available.
Access and deposits
How quickly and easily money can be accessed, or an asset converted into cash, without a material delay, charge or loss in value.Limited access
You cannot withdraw money early without penalties or full closure of the bond.
Minimum deposit
Most fixed-term bonds require at least £500 or £1,000 to open.
Interest and maturity
The date a fixed term ends. The provider will usually return your deposit and interest or offer a new account at that point.Interest payout
Interest may be paid monthly, annually, or at maturity, and this choice can affect total returns.
Maturity options
At the end of the term, you can usually choose to reinvest or have your funds returned to your nominated account.
Who are fixed-term bonds best for?
Fixed-term bonds are best for savers who want guaranteed returns and can commit their money for a set period without needing access. These accounts appeal to those seeking certainty over rates and protection from market fluctuations.
They are well-suited for medium to long-term savings goals — such as building a house deposit, saving for a wedding, or growing a lump sum for a future purchase — where you know you won’t need the funds immediately.
If you value instant access to your money, an easy-access account may be a better choice. For those who want slightly more flexibility, notice accounts can bridge the gap between fixed bonds and instant-access savings.
Do fixed-term bonds pay more interest?
Fixed-term bonds usually offer higher interest rates than easy-access or notice accounts because your money is locked for a set period. By committing your funds for 1, 2, 3, or even 5 years, you give the provider greater certainty over their funding, allowing them to offer more competitive rates.
Macroeconomic factors also play a key role. When central bank rates rise (like the Bank of England's base rate), providers often compete for deposits by improving fixed bond rates. However, longer terms do not always guarantee better returns — if markets expect interest rates to fall in the future, 1 or 2-year bonds may pay more than 5-year bonds.
Tax considerations
Interest from a fixed-term account outside an ISA may be taxable once it exceeds your available allowances. When the interest becomes available can matter as much as the rate: a maturity payout may put several years of interest into one tax year, while annual payouts can use a new Personal Savings Allowance each year.
Paid at maturity
£2,971 total interest arrives in year five
Five years of interest use one allowance. At 42%, the estimated tax is £1,038, leaving £1,933.
Paid each year and reinvested
Each £534 payment is reinvested at an illustrative 3%
Each payment uses a new annual allowance. Reinvesting adds about £165 of interest, taking estimated tax to £141 and leaving £2,694.
Reinvesting annual payouts leaves about £761 more after tax
The fixed account pays less because its interest does not compound there, but reinvesting each payment at 3% adds about £165 and spreads the taxable interest across five years.
Five-year comparison
Tax-rate change: this illustration uses the 42% savings higher rate applying from 6 April 2027. The rate is 40% up to 5 April 2027.
Product terms matter: the maturity example assumes the interest cannot be accessed before maturity, so it arises in one tax year. If interest is credited and available earlier, it may be taxable earlier. The annual example reinvests each £534 payment at 3% until year five, includes tax on that extra interest and assumes no other savings interest uses the £500 allowance.
Sources: tax on savings interest, savings tax rates and when interest is taxed.
Tips for choosing a fixed-term bond
Check four things before fixing your money: access, interest, protection and tax.
Factors to consider
- Before maturity
- Check whether you can withdraw early and whether doing so means a penalty, lost interest or closing the account.
- Adding money
- Many fixed-term accounts accept only an opening deposit or allow a short funding window.
- At maturity
- Check the provider's instructions and decide whether to withdraw, reinvest or move the balance before any default rollover.
- Staggered terms
- You can split a larger amount across accounts that mature at different times. This is often called Holding several fixed-term accounts that mature at different times. This can provide regular access points while parts of your savings remain fixed..
In a nutshell
A fixed-term account gives you certainty. If market rates fall, you keep the rate you locked in; if they rise, you cannot switch without waiting for maturity or accepting any early-access terms. Either way, you know the rate for the whole term.
Pros
- Your rate and return are predictable for the full term.
- You keep the agreed rate if market rates fall.
- Fixed terms may pay more than easy-access accounts.
- Eligible deposits can receive FSCS protection up to £120,000 per person, per authorised firm.
Cons
- You cannot benefit from a better account if market rates rise.
- Your money is locked and early access may be unavailable or costly.
- You usually cannot add more money after opening the account.
- Inflation can reduce the spending power of your return.
Example rates
Fixed-term bonds usually offer higher interest rates than easy-access or notice accounts, but your money is locked for the duration of the term. Below are some of the top fixed-term bonds available right now:
Compare current fixed-rate accounts from one to five years.
What if rates change?
A fixed account keeps the same rate until maturity, but the rates available elsewhere may rise or fall. Use the calculator to see how much better or worse your fixed return could look over the term.
Rate change forecast
Enter the fixed rate, then use a negative movement for a rate fall or a positive movement for a rise.
Fixed-term details
Rate scenario
The bottom line
A fixed-term savings account trades access for certainty.
Match the term to your plans. A fixed-term account can work well when you know when you will need the money and value a guaranteed return. Keep emergency cash accessible, compare what you will keep after tax and check FSCS protection before locking money away.
