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.

Most fixed-term savings bonds from UK providers are covered by the Financial Services Compensation Scheme (FSCS) up to £85,000 per person, per banking group, making them a secure option for savers.

Interest is usually paid annually or at maturity, but some providers offer monthly or quarterly payouts, which can be helpful if you want a regular income stream.

Term	What it means
Fixed-term	The length of time (e.g., 1, 2, or 5 years) that your money is locked in the account.
Bond	A term used by banks to describe a savings account with a fixed term and fixed rate.
Maturity	The date when your fixed term ends and your initial deposit plus interest is returned.
AER (Annual Equivalent Rate)	The standardised rate showing the annual interest if the rate and compounding remained unchanged for 12 months.

Fixed-term savings accounts are straightforward products with clear rules and predictable returns. Here's what sets them apart:

• 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.
• 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 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.

A 1-year fixed bond currently pays around 5.00% AER, while a 5-year bond is currently offering 5.20% AER. Longer terms sometimes offer higher rates, but not always — banks set rates based on funding needs and market conditions.

When longer-term rates are higher, it often indicates that banks expect interest rates to remain stable or fall in the future, so they reward savers for locking in now. Conversely, when long-term rates are lower than short-term rates, it may reflect expectations of rising interest rates so banks don't want to lock into higher payouts over time.

Fixed-term savings bonds are ideal for predictable growth because the rate is locked for the entire term. Use the calculator below to estimate how your deposit could grow, factoring in both the interest rate and the length of the term.

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.

Here's a comparison of the current top fixed-term bond rates:

Bond Term	Top Rate (AER)	Provider	Link
1-year fixed bond	Loading...	Loading...	View
3-year fixed bond	Loading...	Loading...	View
5-year fixed bond	Loading...	Loading...	View

These figures come from the latest best-buy tables and are updated frequently as banks adjust their offerings in response to interest rate changes and market competition.

Notice accounts occupy a middle ground between easy-access savings accounts and fixed-rate bonds. They typically offer better rates than instant-access accounts, without locking your money away for years like a fixed-term bond.

Fixed-rate bonds require you to commit your savings for a set term (e.g., 1 or 2 years) to guarantee a rate. Notice accounts, by contrast, let you withdraw funds with advance notice — usually 30, 60, or 90 days — providing a balance of flexibility and return.

Account Type	Top Rate (AER)	Provider	Link
Easy-access savings	Loading...	Loading...	View
90-day notice savings	Loading...	Loading...	View
180-day notice savings	Loading...	Loading...	View

These headline rates are updated frequently as banks adjust their offerings in response to market conditions. Comparing them with the top fixed-bond rates can help you choose the right mix of flexibility and returns.

Interest earned on fixed-term savings bonds is treated as income and may be taxable. However, many savers pay no tax due to the Personal Savings Allowance (PSA) — which allows up to £1,000 of interest tax-free for basic-rate taxpayers and £500 for higher-rate taxpayers.

If your interest is likely to exceed your PSA, you might consider a cash ISA, where all interest is tax-free. Combining a cash ISA (for tax protection) with a fixed-term bond (for higher rates) can be an effective strategy.

• PSA limits: - £1,000 for basic-rate taxpayers, £500 for higher-rate taxpayers, and none for additional-rate taxpayers.
• Interest payout timing: - Some fixed bonds pay interest annually or at maturity, which may affect how it’s taxed in a given tax year.
• ISA vs fixed bonds: - Cash ISAs sometimes pay slightly lower rates, but the tax-free status can outweigh the difference.
• Couples' strategy: - Each partner has their own PSA, effectively doubling the tax-free allowance for joint savings.

For larger balances, splitting funds between fixed bonds (for high interest) and ISAs (for tax-free returns) is often the most tax-efficient approach.

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.

Fixed-term savings bonds provide guaranteed returns, but they also require committing your money for a set period. Here's a balanced view of their advantages and drawbacks:

The right fixed-term bond depends on how long you can commit your savings and the level of interest you want to lock in. Here are some key factors to consider before opening a bond:

Always look beyond the headline rate. Consider the term length, when interest is paid, and whether the provider offers FSCS protection. A well-chosen bond can help you maximise returns without sacrificing security.

• Term vs. flexibility: - Longer bonds may offer higher rates, but your money will be locked until maturity. Choose a term that fits your financial plans.
• Interest payout: - Some bonds pay monthly or annually, while others pay at maturity. This can affect compounding and your overall return.
• FSCS protection: - Ensure the bank or building society is covered by the Financial Services Compensation Scheme (FSCS), which protects up to £85,000 per person, per banking group.
• Early access rules: - Most bonds do not allow withdrawals before maturity. If they do, penalties are usually steep.
• Rate comparison: - Check whether shorter-term or longer-term bonds offer the best value. Sometimes a 1-year bond can outperform a 3-year one if markets expect rate cuts.

Before committing, consider spreading your savings across multiple bonds with different terms — a strategy called “bond laddering” — to maintain some access to funds while locking in competitive 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: