Everything you need to know about Fixed Rate Bonds

A fixed rate bond is a type of savings account that lets you put your money away for a set period of time in return for a fixed amount of interest on your cash. If you are looking to invest a lump sum, a fixed rate bond could be perfect. It pays a guaranteed amount of interest for a set length of time. You probably will not be allowed to access your savings during the fixed term, so invest money you can afford to lock away.

Fixed rate bonds can offer better returns than easy access savings accounts. The amount of interest you earn on your fixed rate bond will mostly depend on the bond term, but it may also depend on the size of the cash deposit you pay in.

Reasons why you might want to consider a fixed rate bond include:

Guaranteed interest rate: the interest rate you’re offered when you open the account stays the same for the duration of the bond, so you can work out how much interest you’ll earn overall.

Higher interest rates than an easy access account: fixed rate bonds often offer higher interest rates than easy access savings accounts in return for their lack of flexibility. With easy access accounts, you can access your money and pay in more money whenever you need to, but will often earn a lower rate, which can change at any time.

Higher interest rates for longer terms: if you can afford to leave your money untouched for longer, you will usually receive a higher interest rate.