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Fixed-Rate Savings

Lock in at 2.05% for three years

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Fixed savings In October 2008, the UK base rate was 5%. By March 2009, it had slumped to a historic low of 0.5% (where it remains), 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.

10 fixed-rate savings need-to-knows

Fixed-rate savings can be a great financial choice, but read our need-to-knows first to check if they're right for you before you get yourself a deal.

  • Fixed-rate savings are savings accounts where you lock cash away

    Fixed-rate savings give a guaranteed rate for a set period, and the best buy fixed-rate deals are usually better than the best buy easy-access rates.

    The big catch is you can't take your money out during that time, and you won't benefit if other rates rise in that period. Therefore, they're only suitable for those who are happy to lock cash away for the entire term.

  • Unlike easy-access accounts, the rate you get is guaranteed

    Most easy-access savings accounts are variable, meaning the rate can change both with the Bank of England's base rate and at providers' whims. With these accounts, it's important to regularly monitor the interest rate and be ready to ditch and switch.

    But with fixed-rate savings, the rate you get is guaranteed to be the same for the entire term you invest for. So if an account pays you 2.5% AER for three years, you know that's the rate you'll get until the account matures in three years' time.

  • The longer you lock cash away, the more you risk rates rising

    It's important to understand the longer you fix for, the more you are RISKING that other savings rates could be rising, meaning this could become a bad choice. If interest rates were to increase rapidly, you would have lost the flexibility to ditch and switch to a new account that now pays more than your fixed-rate account does.

    The table below shows the top fixed rates for terms of one to seven years. The Bank of England base rate is just 0.5% – it's unlikely to get lower, but talk is that the rate will start to rise again in 2016. So it may be best to err on the side of caution and head for a shorter fix, so that if rates do rise, you won't be losing out for so long.

    Quick questions

    Is now the right time to 'fix' savings?

    Will I ever be able to access my cash if it's in a fixed-rate account?

  • If you have debts, pay those off first before fixing your savings

    If the interest cost of your debt is more than you'd earn on savings you're better off paying down the debt. If you've £1,000 on a credit card at 20% it costs £200 a year, assuming a constant balance. In savings at 2% you'd earn £20 a year so you'd be £180 a year better off repaying the card instead of saving that cash. Much more info in Should I Repay Debts With Savings?, including why you don't need an emergency fund.

    What about my mortgage? Should I overpay that?

  • Haven't used your ISA allowance? Try a fixed-rate cash ISA...

    A cash ISA is simply a savings account where you never pay tax on the interest. Anyone aged 16 or over can put up to £15,240 into their cash ISA during the current tax year, with the threshold rising each April in line with inflation.

    Traditionally this was the first place for taxpayers to put a lump sum, yet the new personal savings allowance has made them a less attractive option. Read Martin’s are ISAs worth it? blog for full analysis on whether or not you should open one.

    Quick question

    Can I access my cash if it's in a fixed-rate ISA?

  • You could get higher rates putting (some of) your cash elsewhere

    Fixed-rate savings boost returns from easy-access accounts, so often they're the natural thought if you've got cash and you don't need to access it. But, there are several different ways to 'save' that you should consider first. These include cash ISAs, high-interest bank accounts and paying off debts. Full info in the Savings Fountain guide.

    Quick questions

    Are you willing to switch bank accounts to get up to 5% interest?

    Can you put money aside each month? Consider a regular savings account...

  • Fixed-rate savings can be used to provide a monthly income

    With fixed-rate savings, you won't usually get paid monthly interest. So many who rely on savings interest as income don't fix savings, even though they pay higher rates. Yet there's a workaround, where you keep some cash and use that as 'interest'. If we ignore tax for ease of explanation, an example should illustrate how this works:

    You've £100,000 and can get 2% in a year-long fixed-rate account and 1.5% in an easy-access account. You'd like roughly £2,000 of interest.

    Put £98,000 in the fixed-rate account, and £2,000 in the easy access. Spend the £2,000 over the year and the £1,960 earned in the fixed-rate account almost makes up for it. Then you're effectively getting the higher rate and spending the interest.

    This way you can grab the higher interest, but retain access to some cash.

  • Up to £75,000 in savings per person is safe in UK-regulated accounts

    Ten years ago, we wouldn’t have had to stress this so clearly. No bank had collapsed in 100 years, but then the credit crunch happened. After the calamities that hit Northern Rock, RBS, the Lloyds group, Bradford & Bingley, Icesave and Kaupthing, every sensible saver should ask: "Is my money safe?"

    If your money's in a UK-regulated bank or building society, it's protected under the Financial Services Compensation Scheme (FSCS) for up to £75,000 per person per institution (falling to £75,000 on 1 January 2016). What this means is if you have £75,000+ with one banking group (eg, with Halifax, Bank of Scotland, AA Savings or Saga), any cash saved above the limit wouldn't be protected. Full info in Are My Savings Safe?

    Quick questions

    What counts as UK-regulated?

    How can I maximise safety if I have more than £75,000 to save?

  • Savings interest is now paid tax free

    It used to be that for every £100 interest earned, basic-rate taxpayers lost £20 in tax, higher rate £40. Yet since 6 April 2016, the new personal savings allowance (PSA) has turned it on its head. Now:

    • All savings interest will be paid gross, ie, there'll be no tax taken off.
    • This works for ALL interest - not just savings accounts, but bank accounts, credit unions & peer-to-peer savings. However share dividends aren't included.
    • Basic 20% rate taxpayers can earn £1,000/yr interest tax-free.
    • Higher 40% rate taxpayers can earn £500/yr interest tax-free.
    • Top 45% rate taxpayers don't get a PSA, so all interest is taxable.
    • Cash ISAs, premium bonds and other tax-free savings interest DON'T count towards the £1,000 (or £500) PSA limit so you can get this interest too.
    • If you earn interest over the limit, you pay tax at your income tax rate, but only on the amount over the limit.

    If you do then owe tax, it'll be taken through your tax code. If you self-assess, you'll declare anything you need to pay there. HMRC estimates the PSA will take 95% of people out of paying savings interest tax altogether. For full info and what to do if you'll earn over the limit see our how the personal savings allowance works guide.

  • If you're willing to up the risk, consider putting cash in peer-to-peer savings

    Also known as crowd-lending, peer-to-peer savings sites are industrial-scale online financial matchmakers getting borrowers and savers together. As the banking middleman is bypassed, borrowers often get slightly lower rates, while savers get improved rates, with the sites themselves profiting via a fee.

    Peer-to-peer looks like saving, tastes like saving, but as there’s no safety guarantee, it smells like an investment. If it appeals to you, you're debt-free, willing to up the risk and put money away for a longer term, then the best way is to start by dipping a toe in the water rather than going the whole hog. For full information read the peer-to-peer savings guide.

Best buys: Top fixed-rate savings

If you've decided fixed-rate savings are right for you, then the table below details the top payers for each savings term from one to five years. We've listed minimum and maximum savings levels, how you open the account, and whether the savings institution has full or shared £75,000 FSCS protection.

However, these rates can be beaten if you're willing to up the risk a tiny bit. Both sharia-compliant savings and EU-protected accounts can beat these rates. Check below to see the rates, and why they're ever so slightly more risky.

WARNING! The rate on application should apply, yet banks are changing savings rates all the time. So always double-check the rate yourself before applying.

The best UK-protected fixed-rate accounts

Here we've included the best UK-protected accounts that pay a fixed rate of interest, from one to five years. However, these rates can be beaten if you're willing to up the risk a tiny bit. Sharia-compliant savings can beat these rates. Check below to see the rates, and why they're ever so slightly more risky.

The best one-year fixed rates

Product Rate (AER) Interest paid Min/Max Deposit How to Open FSCS Protection
Charter Savings BankCharter Savings Bank 1.79% Monthly or annually £1,000/£250,000 Online Full
OakNorth BankOakNorth 1.61% Annually £1,000/£100,000 Online Full
Habib Bank ZurichHabib Bank Zurich 1.55% On maturity £1,000/£1 million Online Full

Best ‘Big Brand’ Savings. While all the accounts above have the full £75,000 UK savings safety protection – you asked us to ensure there’s a ‘name you know’ too. The account below is the top payer of those (however, there are other products - albeit not by well-known names - as well as the ones above, that beat it on rate too).

Co-op BankCo-op Bank 1.5% Monthly or annually £1,000/£1 million Online/Phone/Branch Shared

The best two-year fixed rates

Product Rate (AER) When is interest paid? Min/Max Deposit How to Open FSCS Protection
Charter Savings BankCharter Savings Bank 1.91% Monthly or annually £1,000/£250,000 Online Full
OakNorth BankOakNorth Bank 1.86% Annually £1,000/£100,000 Online Full
United Trust BankUnited Trust Bank 1.85% Annually £500/£500,000 Online/Post Full

Best ‘Big Brand’ Savings. While all the accounts above have the full £75,000 UK savings safety protection – you asked us to ensure there’s a ‘name you know’ too. The account below is the top payer of those (however, there are other products - albeit not by well-known names - as well as the ones above, that beat it on rate too).

Tesco Bank*Tesco Bank 1.8% Monthly or annually £2,000/£5 million Online/Phone Full

The best three-year fixed rates

Product Rate (AER) When is interest paid? Min/Max deposit How to open FSCS protection
United Trust BankState Bank of India 2.05% Annually £500/£500,000 Online/post Full
Bank of Cyprus UKBank of Cyprus UK 2% Monthly or annually £10,000/£1 million Online Full
State Bank of IndiaState Bank of India 1.95% Monthly or annually £10,000/£5 million Post Full

Best ‘Big Brand’ Savings. While all the accounts above have the full £75,000 UK savings safety protection – you asked us to ensure there’s a ‘name you know’ too. The account below is the top payer of those (however, there are other products - albeit not by well-known names - as well as the ones above, that beat it on rate too).

Co-op BankCo-op Bank 1.9% Monthly or annually £1,000/£1 million Online/Phone/Branch Shared

The best four-year fixed rates

There is currently only one four-year account that beats three-year accounts on rate - see below.

Product Rate (AER) When is interest paid? Min/Max deposit How to open FSCS protection
Vanquis BankVanquis Bank 2.16% Monthly or annually £1,000/£250,000 Online Full

The best five-year fixed rates

Product Rate (AER) When is interest paid? Min/Max deposit How to open FSCS protection
Raphaels BankRaphaels Bank 2.35% Annually or on maturity £5,000/£250,000 Post Full
Vanquis BankVanquis Bank 2.31% Monthly or annually £1,000/£250,000 Online Full
Harrods BankHarrods Bank 2.3% Annually and at maturity £20,000/£2.5 million Online/Post Full

Best ‘Big Brand’ Savings. While all the accounts above have the full £75,000 UK savings safety protection – you asked us to ensure there’s a ‘name you know’ too. The account below is the top payer of those (however, there are other products - albeit not by well-known names - as well as the ones above, that beat it on rate too).

Tesco Bank*Tesco Bank 2.1% Monthly or annually £2,000/£5 million Online/Phone Full

Higher-paying fixed savings with a but...

If you can buck convention you can earn more with fixed savings. All the accounts above are straightforward deals, yet a host of other accounts do pay more, but with a but. So we’ll only list accounts here that beat the normal best buys.

  • Sharia compliant accounts – fully UK protected, but rate not guaranteed.  The very top-paying two and three year accounts are from a Sharia-compliant Islamic bank.

    As Islam bars interest, instead of an interest rate they give an 'expected profit rate' - this has always been paid out by the bank listed below, though by definition it can’t be certain.

    The top payer is the Al Rayan Bank which pays 2.02% for two years and 2.32% for three years – beating the best buys above. It has the full UK £75,000 per person savings safety protection.

The Savings Calculator

This calculator allows you to calculate how much interest you’ll be paid over the course of your fixed rate bond.

To get the best results out of the calculator, put in the value of your lump sum in the "How much do you already have?" field. Then, put in your interest rate into the next field. Most fixed-rate accounts don't allow you to put extra cash in monthly, so enter a zero in this field. Then, select the length of your fixed rate bond in the "How far ahead do you want to look?" field. Finally, choose your tax rate.

This calculator makes a few assumptions, the main one being that your interest will compound. In some cases, for example, if you have monthly or annual income paid out to a different account, that won't be the case, so the calculation in this case will be slightly out.

Savings Calculator

Pick your question...


How far ahead do you want to look? &
How much tax do you pay?

How much tax do you pay?

When do you need it by? &
How much tax do you pay?

Want to complain about your savings provider?

If your savings provider has given you the incorrect interest rate, or you haven't received your interest at all, then you don't have to suffer in silence. It's always worth trying to call your provider first to see if it can help, but if not...

Resolver Info Box

This tool helps you draft your complaint and manage it too. It’s totally free, and offered by a firm called Resolver, which we like so much we work with it to help people get complaints justice.

If the complaint isn't resolved, you can use Resolver to escalate it to the free Financial Ombudsman Service.

Q&A Savings

  • What’s the top fixed-rate savings account for joint savings?

  • How does inflation affect my savings?

  • What about when there's deflation?

  • What happens if my tax status changes during the fix?

  • A friend of mine said a fixed-rate savings account is a bond. I'm confused, what does she mean?