Fixed Rate Savings Lock-in at 3.6% for one year

In October 2008, UK interest rates were 5%, yet they have since slumped to a historically low 0.5%, slicing saving rates massively.

One way to boost your rate is to 'fix' your savings, but be prepared to lock your cash away without access to it.

What is a Fixed Rate?

Most savings accounts are variable - the rate can change both with the Bank of England's base rate and as providers change their competitive stance. It's important to regularly monitor your account's rate. If it plummets, ditch and switch. Yet there are some alternatives to monitoring interest rates:

Fixed rate savings give a guaranteed rate for a set period, but you can't take your money out during that time.

Therefore, they're only suitable for those who are happy to lock cash away for the entire term. It is also very important to understand that the longer you fix for, the more you are RISKING the fact that an unpredicatable future could mean this becomes a bad choice. If interest rates were to increase rapidly, you would’ve lost the flexibility to ditch and switch to a better payer. Plus if the savings safety status of the institution changes, it's more difficult get your cash out.

Yet currently, many lenders are desperate to get hold of your cash so there are some decent rates available. With fixed rates, they'll know how long they have your money for, thus allowing them to plan their lending strategies better.

Will I definitely get this rate?

Apply now and you should get the rate advertised. However, there is always a chance banks that cut the interest on new fixed rate accounts will attempt to shove you onto a new, lower rate. Be very vigilant during the application procedure, and double check the rate before moving cash in (maybe even give them a quick call).

How safe are your savings?

Bank collapse was once easy to dismiss, then the credit crunch and global market turmoil hit. After the calamities hitting Northern Rock, Bradford & Bingley, Icesave and Kaupthing, every sensible saver should ask themselves: “is my money safe?"

The answer is simple. Provided your money is in a UK-regulated bank or building society account, it's protected under the Financial Services Compensation Scheme (FSCS) and here's the golden rule:

£85,000 per person, per financial institution is guaranteed.

Sadly, this is the simple face of savings safety. The exact rules are more complex, involving how different banks are registered and what counts as a financial institution. Also remember, if you did need to claim compensation, that would likely mean you won't have access to that cash for a few months. For full info read the full Are Your Savings Safe? guide.

How to maximise safety

The techniques to adopt depend on the amount of cash you want to save.

• Over £85,000. For those with bigger savings, in the unlikely event a bank or building society went bust, don't put more than £85,000 in any one institution; spread it around.

• Very large amounts. For those with very large amounts of savings (for example, a house sale or inheritance), you may need lots of accounts. Even if you've too much to stick to the £85,000 limit for each, the general rule of not having all your eggs in one basket still works.

• Less than £85,000. If you've less than £85,000, there's no problem in terms of protection. Yet if you were to have to claim compensation, this takes time, and meanwhile you wouldn't have access to your cash. Thus it's still worth considering spreading money across more than one institution.

For more info see the how to get 100% safety section of the savings safety guide.

This guide and best buys

It's impossible to know which bank is in trouble. As well as the UK banks, we've seen great names of world banking like Goldman Sachs and Merrill Lynch hit trouble.

Therefore, the only solution for this site is that we'll report the top rates and explain any 'protection oddities'. So far, world governments have reacted to protect their banks, and no savers have lost money. It's likely (though not certain) this will continue.

Best buys: Top fixed rate savings

The most competitive rates tend to be for shorter terms. This also allows you the flexibility that you're not locked in for too long. In the comparison for the rates below, the top instant access accounts currently pay around 3%.

However, there is a way to beat fixed rate accounts. Regular savings accounts currently pay up to 8% AER, fixed for a year; these let you save up to £250 - £500/month, though you can't put large lump sums in one. Also, the money only moves slowly into the account, affecting how much interest you'll earn. For the top accounts and how to use them best, read Regular Savings Accounts.

Always double check the rate yourself before applying.
All major updates go in the free weekly e-mail.

The best one year fixed rates

If you can spare access to your cash for a year, you can benefit from some higher rates.

Cahoot UK 3.6% AER Online. Min £25,000.

• Product Link:Cahoot Fixed Rate Bond*
• Rate: 3.6% AER
• Length of fixed deal: 1 year
• Min. deposit:£25,000
• Max. deposit £2 million
• Savings safety: Shared £85,000 FSCS

Full details

If you have a big £25,000 to save, the Cahoot* fixed rate bond pays 3.6% AER. However, no additional deposits or withdrawals can be made after opening. You can open and operate the account online and interest is paid annually.

Cahoot shares its £85,000 protection between Santander, Bradford & Bingley, A&L and Asda. If you have more than one account with these institutions, the excess won't be covered. See more information about the Savings Safety rules.

Tesco Bank 3.5% AER Online. Min £2,000.

• Product & linkTesco Bank*
• Rate: 3.5% AER
• Length of fixed deal: 1 year
• Min deposit: £2,000
• Max deposit: £5 million
• Savings safety: Full £85,000 FSCS protection

Full details

The one-year Fixed Rate Saver from Tesco* pays 3.5% AER on balances over £2,000, but no additional deposits can be made. You can open and operate the account online. Interest can be paid annually or monthly.

Tesco Bank has the full £85,000 UK savings guarantee. See more information about the Savings Safety rules.

The best two year fixed rates

By saving for a bit longer, the rates available can jump. Always remember the longer you lock cash away for, the more of a chance there is that rates will rise while your cash is untouchable.

Investec 3.8% AER Online, post or phone. Min £25,000

• Product & link: Investec Fixed Term Deposit
• Rate: 3.8% AER
• Length of fixed deal: 2 years
• Min deposit: £25,000
• Max deposit: £1 million
• Savings safety: Full £85,000 FSCS protection

Full details

If you have a big £25,000 to save, the Fixed Rate Deposit Account from Investec pays 3.8% AER for two years. You can apply for and operate the account online, by post or phone. Additional deposits aren't allowed. Interest is paid at maturity.

Investec has the full £85,000 savings safety guarantee. See more information about the Savings Safety rules.

Close Brothers Savings 3.75% AER Apply by post. Min £10,000.

• Product & link:Close Brothers Savings
• Rate: 3.75% AER
• Length of fixed deal: 2 years
• Min deposit: £10,000
• Max deposit £2 million
• Savings safety: Full £85,000 FSCS protection

Full details

The Close Brothers Savings Premium Gold account pays 3.75% AER for three years on balances over £10,000, but no additional deposits or withdrawals can be made. Applications can be made by post only and interest is paid on the account anniversary and at maturity.

Close Brothers has the full £85,000 UK saving safety guarantee, see more information about the Savings Safety rules.

Allied Irish Bank (GB) 3.7% AER Post or phone. Min £1,000

• Product & linkAllied Irish Bank (GB)*
• Rate: 3.7% AER
• Length of fixed deal: 2 years
• Min deposit: £1,000
• Max deposit: £2 million
• Savings safety: Full £85,000 FSCS protection

Full details

The Fixed Rate Bond from Allied Irish Bank (GB)* pays 3.7% AER for two years. You can apply for and operate the account by post or by phone, but only one deposit can be made. Interest is paid annually on the account anniversary and at maturity.

Allied Irish Bank (GB) is part of the Allied Irish Group and shares its £85,000 savings safety guarantee with First Trust Bank. See more information about the Savings Safety rules.

The best three year fixed rates

If you're happy locking your cash away for longer, you can get more in a three year account. However if interest rates recover between now and the end of the fixed term, you could lose out so make sure you're prepared to take the gamble.

Close Brothers Savings 4% AER Apply by post. Min £10,000.

• Product & link:Close Brothers Savings
• Rate: 4% AER
• Length of fixed deal: 3 years
• Min deposit: £10,000
• Max deposit £2 million
• Savings safety: Full £85,000 FSCS protection

Full details

The Close Brothers Savings Premium Gold account pays 4% AER for three years on balances over £10,000, but no additional deposits or withdrawals can be made. Applications can be made by post only and interest is paid on the account anniversary and at maturity.

Close Brothers has the full £85,000 UK saving safety guarantee, see more information about the Savings Safety rules.

Yorkshire Bank/Clydesdale Bank 3.9% AER Online, post or branch. Min £2,000

• Product & linkYorkshire Bank/Clydesdale Bank
• Rate: 3.9% AER
• Length of fixed deal: 3 years
• Min deposit: £2,000
• Max deposit: £5 million
• Savings safety: Shared £85,000 FSCS protection

Full details

The Fixed Term Deposit account from Yorkshire Bank/Clydesdale Bank pays 3.9% AER for three years. You can apply for and operate the account online, by post or in branches, but only one deposit can be made. Interest can be paid annually or monthly.

Yorkshire and Clydesdale Banks share the £85,000 savings safety guarantee. See more information about the Savings Safety rules.

Halifax 3.85% AER Online. Min £500

• Product & link:Halifax*
• Rate: 3.85% AER
• Length of fixed deal: 3 years
• Min deposit: £500
• Max deposit: £5 million
• Savings safety: Shared £85,000 FSCS protection with HBOS group

Full details

The Halifax* Fixed Online Saver pays 3.85% AER for three years on balances over £500 but no additional deposits can be made after opening. It's an online only account and interest can be paid annually or monthly. Withdrawals are not permitted, however you can close the account early, but a huge 270 day interest penalty will apply.

Halifax shares its £85,000 UK savings safety guarantee with the rest of the HBOS group. See more information about the Savings Safety rules.

The best four year fixed rates

It's possible to increase the rate further by locking away your cash for longer. However, you're gambling on rates staying low for a long period. If UK interest rates recover between now and 2016, you could lose out as your cash is stuck at this rate.

Halifax 4.05% AER Online. Min £500

• Product & link:Halifax*
• Rate: 4.05% AER
• Length of fixed deal: 4 years
• Min deposit: £500
• Max deposit: £5 million
• Savings safety: Shared £85,000 FSCS protection with HBOS group

Full details

The Halifax* Fixed Online Saver pays 4.05% AER for four years on balances over £500 but no additional deposits can be made after opening. It's an online only account and interest can be paid annually or monthly. Withdrawals are not permitted, however you can close the account early, but a massive 320 day interest penalty will apply.

Halifax shares its £85,000 UK savings safety guarantee with the rest of the HBOS group. See more information about the Savings Safety rules.

The best five year fixed rates

If you're happy to lock your cash away for up to five years it's possible that by sacrificing access for longer, you could up the rate slightly. This depends on rates staying low until 2017, though.

AA Savings 4.4% AER Postal. Min £1

• Product & linkAA Savings
• Rate: 4.4% AER
• Length of fixed deal: 5 years
• Min deposit: £1
• Max deposit £5 million
• Savings safety: Shared £85,000 FSCS protection with HBOS group

Full details

The fixed rate account from AA Savings is paying 4.4% AER on its five year bond, for balances over £1. You can open the account online but can only operate it by post. Interest is paid annually on the account anniversary.

The AA shares its £85,000 UK savings safety guarantee with the rest of the HBOS group. For more info see the Safe Savings guide.

Yorkshire Bank/Clydesdale Bank 4.25% AER Online, post or branch. Min £2,000

• Product & linkYorkshire Bank/Clydesdale Bank
• Rate: 4.25% AER
• Length of fixed deal: 5 years
• Min deposit: £2,000
• Max deposit: £5 million
• Savings safety: Shared £85,000 FSCS protection

Full details

The Fixed Term Deposit account from Yorkshire Bank/Clydesdale Bank pays 4.25% AER for five years. You can apply for and operate the account online, by post or in branches, but only one deposit can be made. Interest can be paid annually or monthly.

Yorkshire and Clydesdale Banks share the £85,000 savings safety guarantee. See more information about the Savings Safety rules.

Use the net to compare top rates

For other lengths of fixed rates, and a full list of fixed rate savings accounts use the MoneySupermarket* and Moneyfacts comparisons, in conjunction with the Savings Safety guide to examine the protection for any accounts. However, with these it's crucial you double check the rates on the banks' own websites before applying, as the comparison tables are NOT continually updated.

What about my existing savings?

If you've already got a savings account, what happens in this low base rate environment depends on whether it is fixed or variable. If you've got a fixed rate account, the rate will apply for the set period. However, any other accounts are likely to be variable, and this means the provider can chop the rate whenever it likes.

Always monitor your rate closely. Our Savings Accounts and Cash ISA guides include details on which accounts have already dropped their rates and which haven't. Once you're told about a cut, check your own account and ditch 'n' switch if it's dropped.

Do you live off savings interest?

When using fixed rate savings, you won't usually get paid monthly interest. Therefore many who rely on interest earned from savings as an income stream don't fix, even though they could get higher rates. there's a workaround though.

Here's an example (ignoring tax for ease of explanation)...

This way you can grab the higher fixed rate accounts, but retain access to enough cash in the meantime. Remember though, if you might need to get at the whole lump within the fixed term, this trick won't help and fixed rates may not be for you.