Best 3 Year Fixed Rate Bonds

Depositor Protection

Eligible deposits with UK institutions are protected by the Financial Services Compensation Scheme (FSCS) up to a maximum level of protection of £85,000 per person per institution. All new savings or bank accounts provided to UK customers are now covered by the FSCS.

Disclaimer

All rates subject to change without notice. Please check all rates and terms before investing or borrowing.

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How does a three-year fixed rate bond work?

Three-year bonds work in much the same way as other types of fixed savings accounts; you must be prepared to lock away your funds for a specified amount of time and, in return, you’ll receive an interest rate that is guaranteed not to change throughout the duration of the term.

To get started, you’ll need a lump sum you’re looking to grow or earn a monthly income from. Minimum deposits vary based on account and provider, but typically range anywhere from just £1 to £10,000 or more. While you won’t be able to access your cash throughout the term, you may be able make further additions for a small window of time if permitted by your bank or building society.

Returns are most often accrued monthly, yearly, on anniversary or on maturity and will either need to be paid away or compounded. Once the fixed term comes to an end, you’ll then be able to withdraw or reinvest your pot.

^*Ongoing volatility in the savings market means that some variable accounts and shorter-term bonds currently offer higher rates than their longer-term equivalents.

Is a three-year fixed rate bond safe?

So long as your three-year fixed bond is covered by the Financial Services Compensation Scheme (FSCS), you can be safe in the knowledge your funds are protected should your savings provider go out of business.

The FSCS protects deposits up to £85,000 held under one banking licence; to find out which financial institutions share a licence, read our who owns whom guide. Meanwhile, to check whether your account or provider is covered by the scheme, look for the ‘FSCS Protected’ badge next to a listing on our chart or visit the FSCS website.

Alternatives to a three-year fixed rate bond

If it’s likely you’ll need access to your cash in the next few years, a three-year bond may not be the best choice. Instead, you could compare more flexible options, such as an easy access savings account or notice account.

Alternatively, if you’re worried about earning enough in interest to exceed your Personal Savings Allowance (PSA), you may want to consider a tax-wrapper for your funds. Any returns from Individual Savings Accounts (ISAs), for instance, are automatically tax-free.

Alternative terms

Fixed bonds offer a wide range of different terms to suit a variety of goals and circumstances. If you’re not comfortable locking away your savings for three-years, you could explore shorter-term options, such as two-year bonds, one-year bonds, or even bonds of less than a year.

However, if you want to secure a fixed savings rate for longer, you could consider either a four-year bond or five-year bond.