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, yet you must be prepared to lock your cash away without access to it.
In this guide
Best Buys: Fixed Savings
What does a Fixed Rate mean?
Most savings accounts are variable, meaning 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 and 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 means this could be 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, that's balanced out because there are some still decent rates available. This is because many lenders are desperate to get hold of your cash. Plus with fixed rates, they get surety they can keep it till a defined time, 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 the 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, and that's just in the UK, every sensible saver should ask themselves: “is my money safe?"
The answer is quite 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.
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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.
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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.
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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, and 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 Savers 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.
AA Savings 3.6% AER
Postal. Min £1
- Product & linkAA Savings
- Rate: 3.6% AER
- Length of fixed deal: 1 year
- Min deposit: £1
- Max deposit: £5 million
- Savings safety: Shared £85,000 FSCS protection with HBOS group
The fixed rate account from AA Savings is paying 3.6% AER on its one 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. See more information about the Savings Safety rules.
First Save 3.6% AER Online. Min £1,000
- Product & link: First Save
- Rate: 3.6% AER
- Length of fixed deal: 1 year
- Min deposit: £1,000
- Max deposit: £2 million
- Savings safety: Full £85,000 FSCS protection
The Fixed Rate Bond from First Save pays 3.6% AER for a year on balances over £1,000. You can apply for and operate the account online, but only one deposit can be made. Interest is paid annually or monthly.
First Save has the full £85,000 savings safety guarantee. See more information about the Savings Safety rules.
18 month: Shawbrook Bank 3.9% AER Postal. Min £5,000
- Product & linkShawbrook Bank
- Rate: 3.9% AER
- Length of fixed deal: 1 ½ years
- Min deposit: £5,000
- Max deposit: £500,000
- Savings safety: Full £85,000 FSCS protection
Shawbrook Bank, previously known as Whiteaway Laidlaw, was launched in October 2011. It doesn't operate in branches but does have the full FSCS guarantee.
If you can fix for slightly longer than a year, the 18 month Fixed Rate Bond account from Shawbrook Bank pays 3.9% AER. You can apply for and operate the account by post, with a minimum deposit of £5,000. Additional deposits can be made while the account remains available. Interest is paid annually on 31 December.
However, please be aware, Shawbrook is a small bank. Large numbers of applications may mean this account is withdrawn soon and that applications may be delayed.
Shawbrook Bank has the full £85,000 savings safety 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 that the longer you lock cash away for, the more of a chance there is that rates will rise while your cash is untouchable.
First Save 4% AER Online. Min £1,000
- Product & link: First Save
- Rate: 4% AER
- Length of fixed deal: 2 years
- Min deposit: £1,000
- Max deposit: £2 million
- Savings safety: Full £85,000 FSCS protection
The Fixed Rate Bond from First Save pays 4% AER for two years on balances over £1,000. You can apply for and operate the account online, but only one deposit can be made. Interest is paid annually or monthly.
First Save has the full £85,000 savings safety guarantee. See more information about the Savings Safety rules.
Yorkshire Bank/Clydesdale Bank 4% AER Online, post or branch. Min £2,000
- Product & linkYorkshire Bank/Clydesdale Bank
- Rate: 4% AER
- Length of fixed deal: 2 years
- Min deposit: £2,000
- Max deposit: £5 million
- Savings safety: Shared £85,000 FSCS protection
The Fixed Term Deposit account from Yorkshire Bank/Clydesdale Bank pays 4% AER for two 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.
The Best Three Year Fixed Rates
It's possible to push the rate up even further by sacrificing access to the cash for longer. Yet you'll be taking a bigger gamble on rates staying low for a long period; if UK interest rates recover between now and 2015, you could lose out as your cash is stuck at this rate.
Yorkshire Bank/Clydesdale Bank 4.3% AER Online, post or branch. Min £2,000
- Product & linkYorkshire Bank/Clydesdale Bank
- Rate: 4.3% AER
- Length of fixed deal: 3 years
- Min deposit: £2,000
- Max deposit: £5 million
- Savings safety: Shared £85,000 FSCS protection
The Fixed Term Deposit account from Yorkshire Bank/Clydesdale Bank pays 4.3% 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 4.15% AER
Postal. Min £1
- Product & linkHalifax*
- Rate: 4.15% AER
- Length of fixed deal: 3 years
- Min deposit: £500
- Max deposit: £5 million
- Savings safety: Shared £85,000 FSCS protection with HBOS group
The Halifax* Fixed Online Saver pays 4.15% 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 but if you choose to close the account early, a 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
Currently, the top four year account matches the top three year account - showing that even banks aren't sure what will happen to interest rates. Consider a slightly shorter term, or a higher rate five year account if you can lock cash away for that long..
Shawbrook Bank 4.45% AER Postal. Min £5,000
- Product & linkShawbrook Bank
- Rate: 4.45% AER
- Length of fixed deal: 4 years
- Min deposit: £5,000
- Max deposit: £1 million
- Savings safety: Full £85,000 FSCS protection
Shawbrook Bank, previously known as Whiteaway Laidlaw, was launched in October 2011. It doesn't operate in branches but does have the full FSCS guarantee.
The Fixed Rate Bond account from Shawbrook Bank pays 4.45% AER for four years. You can apply for and operate the account by post, with a minimum deposit of £5,000. Additional deposits can be made while the account remains available. Interest is paid annually on 31 December.
However, please be aware, Shawbrook is a small bank. Large numbers of applications may mean this account is withdrawn soon and that applications may be delayed.
Shawbrook Bank has the full £85,000 savings safety guarantee. See more information about the Savings Safety rules.
Halifax 4.3% AER
Postal. Min £1
- Product & linkHalifax*
- Rate: 4.3% AER
- Length of fixed deal: 4 years
- Min deposit: £500
- Max deposit: £5 million
- Savings safety: Shared £85,000 FSCS protection with HBOS group
The Halifax* Fixed Online Saver pays 4.3% 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 but if you choose to close the account early, a 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, though this is risking rates staying low until 2016.
Yorkshire Bank/Clydesdale Bank 4.7% AER Online, post orbranch. Min £2,000
- Product & linkYorkshire Bank/Clydesdale Bank
- Rate: 4.7% AER
- Length of fixed deal: 5 years
- Min deposit: £2,000
- Max deposit: £5 million
- Savings safety: Shared £85,000 FSCS protection
The Fixed Term Deposit account from Yorkshire Bank/Clydesdale Bank pays 4.7% 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.
BM Savings 4.65% AER
Postal. Min £1
- Product & linkBM Savings*
- Rate: 4.65% AER
- Length of fixed deal: 5 years
- Min deposit: £1
- Max deposit: £10 million
- Savings safety: Shared £85,000 FSCS protection with HBOS group
The BM Savings* five year fixed rate bond pays 4.65% AER, and you can save from £1. You can make withdrawals, but you'll face a hefty penalty of up to 365 days interest - so if you think you'll need access, it's best to opt for a short fix.
You can open the account online but only operate it by post. Interest can be paid annually or monthly.
Birmingham Midshires shares its £85,000 UK savings safety guarantee with the rest of the HBOS group, including Halifax, The AA and Saga. 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.