Fixed rate bonds tend to offer some of the highest savings rates on the market if you are happy to lock your cash away. But if you want a great rate, you might need to act quickly as rates are dropping. Here are our top picks for the best fixed rate savings accounts.
Due to the restrictions that come with fixed rate bonds, they are better suited to specific savers with certain goals. You would need to be happy to not have access to your money for a period of time.
So below we’ve explained how fixed rate bonds work, if this savings account is right for you, and some of the best rates on the market.
This guide covers:
- What is a fixed rate bond?
- Is a fixed rate bond right for you?
- Are fixed rate bonds going up?
- The best one year fixed rate bonds
Read more: Best savings accounts in 2023
What is a fixed-rate bond?
Fixed rate savings accounts guarantee a particular rate of interest over a certain period. This is what makes it different to variable accounts, like easy access savings rates, which can fluctuate at your provider’s discretion.
In addition, fixed rate bonds rarely let you withdraw from your funds until it matures. If your provider does allow you to access your savings, this is usually at penalty which can come in the form of a loss of interest.
Is a fixed rate bond right for you?
It is important to consider your savings goals, and when you might need access to your money, before taking out a fixed rate bond.
If you’re looking to start an “emergency fund” – where you can pay a plumber or go on an expensive holiday at a moment’s notice – then perhaps an easy access account is better suited for you.
But if you’ve planned for a longer term goal, such as saving for a house deposit or an inflation-beating return for retirement, then the top returns on a fixed rate bond could be an option.
Read more: Best easy-access savings accounts
Are fixed rate bonds going up?
In January last year, some of the top savings rates on the market were paying little more than 2%. Today, there are now providers paying almost triple this with rates over 5.5%.
Much of this is due to the multiple Bank of England base rate increases since 2021. However, this isn’t the only variable savings providers take into consideration when determining their fixed rates.
Swap rates, which banks use to protect themselves from volatile interest rate fluctuations, and your provider’s appetite to lend are just some factors which also matter.
Whether savings rates will continue to rise remains to be seen. Much of the answer will depend on where the market expects interest rates to fluctuate.
Read more: What do UK interest rate rises mean for you?
What fixed rate term should I choose?
When determining the length of your fixed rate bond, keep your savings goals in mind. Typically, the greater the term earns the better rate – but your money will be locked away for longer. However, this relationship has been somewhat distorted this year, with the best rates attached to shorter term bonds.
While rate and term are important, you may also wish to consider when your interest is paid. This is especially important if you’re opening an account with a large deposit – with regular interest payouts potentially impacting your tax bill.
The best one-year fixed-rate savings accounts
SmartSave, which was created by Chetwood Financial, offers the best one year fixed rate on the market.
| Provider | Account name | Interest rate (AER) | Min/max deposit | Account access | |
|---|---|---|---|---|---|
 | 1 Year Fixed Rate Saver | 5.28% | £10,000 / £85,000 | Online | |
 | Fixed Saver 1 Year | 5.27% | £1,000 / £750,000 | Telephone / Online | |
 Sponsored | 1 Year Fixed Term Deposit (provided by Paragon Bank) * | 4.60% | £10,000 / £85,000 | Online | More info |
| This listing is sponsored by Raisin UK | |||||
 | 6 Month Bond (Issue 10) | 5.18% | £1 / £250,000 | Online | |
 | 1 Year Fixed Rate Bond | 5.18% | £10,000 / £2,000,000 | Online / Telephone | |
| | 1 Year Bond (Issue 63) | 5.17% | £1 / £250,000 | Online | |
Powered by data from Savings Champion
The best two-year fixed savings accounts
Hampshire Trust Bank and Atom Bank offer the joint market-leading rate.
| Provider | Account name | Interest rate (AER) | Min/max deposit | Account access | |
|---|---|---|---|---|---|
| | 2 Year Bond (Issue 85) | 5.00% | £1 / £250,000 | Online | |
 | 2 Year Fixed Rate Bond (Online Only) | 5.00% | £1,000 / £1,000,000 | Online / Telephone | |
| Sponsored | 2 years Fixed Term Deposit (provided by Paragon Bank) * | 4.25% | £1,000 / £85,000 | Online | More info |
| This listing is sponsored by Raisin UK | |||||
 | Fixed Term Deposit – Two Years | 5.00% | £10,000 / £5,000,000 | Branch / Online / Post | |
| | 2 Year Fixed Rate Bond | 5.00% | £10,000 / £2,000,000 | Online / Telephone | |
| | 2 Year Fixed Rate Saver | 4.97% | £10,000 / £85,000 | Online | |
Powered by data from Savings Champion
The best three-year fixed savings accounts
The three year fixed rate chart remains highly competitive, with only a few percentage points separating the top providers.
| Provider | Account name | Interest rate (AER) | Min/max deposit | Account access | |
|---|---|---|---|---|---|
 | 30 Month Fixed Rate Bond Issue 242 | 4.75% | £5,000 / £1,000,000 | Branch / Online / Post / Telephone | |
| | 3 Year Bond (Issue 64) | 4.65% | £1 / £250,000 | Online | |
| Sponsored | 3 years Fixed Term Deposit * | 4.50% | £5,000 / £85,000 | Online | More info |
| This listing is sponsored by Raisin UK | |||||
| | 3 Year Fixed Rate Saver | 4.64% | £10,000 / £85,000 | Online | |
 | 3-Year Fixed Term Deposit (provided by UBL UK) | 4.63% | £1,000 / £85,000 | Online | |
 | 3 Year Fixed Rate Bond Issue 68 | 4.63% | £1,000 / £2,000,000 | Email / Online / Telephone | |
Powered by data from Savings Champion
The best five-year fixed-rate savings accounts
Hampshire Trust Bank continues its dominance across the fixed rate charts by topping the five year table.
| Provider | Account name | Interest rate (AER) | Min/max deposit | Account access | |
|---|---|---|---|---|---|
| | 5 Year Bond (Issue 36) | 4.54% | £1 / £250,000 | Online | |
| | 5 Year Fixed Rate Bond Issue 48 | 4.53% | £1,000 / £2,000,000 | Email / Online / Telephone | |
| Sponsored | 5 years Fixed Term Deposit * | 4.00% | £1,000 / £85,000 | Online | More info |
| This listing is sponsored by Raisin | |||||
| | 5 Year Fixed Rate Bond | 4.53% | £10,000 / £2,000,000 | Online / Telephone | |
| | 5 Year Fixed Term Deposit (Provided by UBL UK) * | 4.52% | £2,000 / £85,000 | Online | More info |
| | 5 Year Fixed Rate Saver | 4.52% | £10,000 / £85,000 | Online | |
Powered by data from Savings Champion
Are fixed rate bonds tax-free?
Fixed rate bonds aren’t exempt from tax. The interest you earn each tax-year counts towards your personal allowance, which is determined on your income tax bracket.
Any interest earned over this amount is subject to income tax, much the way of your regular income.
Read more: What is the personal savings allowance?
If you’re concerned that you may breach your personal savings allowance, then it could be worth considering a fixed rate ISA as an alternative. These accounts allow you to save up to £20,000 a year tax efficiently.
Read more: The best cash ISAs in 2023
What are the alternatives to a fixed rate bond?
If you’re looking to lock away your money for at least five years, then investing could generate better returns. However, it is key to remember that this isn’t guaranteed.
The value of your balance could move up or down, so you may get back less than your deposit.
Read more: Investing for beginners
Important information
Some of the products promoted are from our affiliate partners from whom we receive compensation. While we aim to feature some of the best products available, we cannot review every product on the market.
