Best 4 Year Fixed Rate Bonds

How does a four-year fixed bond work?

Fixed rate bonds pay an interest rate that is guaranteed to neither rise nor fall in exchange for locking away your funds for a specified amount of time - in this case, four years.

There’s no universal minimum deposit required to apply for a four-year fixed rate bond; opening amounts will vary depending on the provider and can range anywhere from £1 to over £10,000. You should consider your initial investment carefully, however, as accessing your cash before the term ends is usually prohibited. Although some accounts may allow you to add to your savings for a limited time, it’s also common for there to be restrictions on making further deposits.

After deciding whether a four-year fixed bond is right for you, you’ll also need to think about how often you’d like to receive returns. A monthly interest account may be preferred by those looking to supplement their usual income, while, to grow your pot, you could choose an account that compounds interest yearly or on anniversary. Some fixed bonds will even pay interest on maturity, at which point you’ll have the choice of withdrawing or reinvesting the rest of your cash.

^* Uncertainty surrounding when central interest rates will come down significantly means some longer-term bonds are being outperformed by their shorter-term counterparts and variable rate accounts.

Is a four-year bond safe?

Yes, your money is safe in a four-year fixed bond so long as the account is covered by the Financial Services Compensation Scheme (FSCS). The FSCS protects funds of up to £85,000 in the event of a provider going bust, but it’s important to note this limit applies to any deposits held under one banking licence and is not per account.

All of the savings accounts on our charts are covered by the scheme (as demonstrated by the ‘FSCS protected’ badge displayed next to each listing), however, you can always check whether a provider is protected via the FSCS website.

Meanwhile, you can find out which banks and building societies share a licence using our guide to who owns whom.

Why choose a four-year fixed bond?

If you’re saving towards a long-term goal, a four-year fixed bond could help you meet your target providing you won’t need to access your cash in the interim.

You could also consider this type of savings account if you believe interest rates are likely to fall in the not-too-distant future.

However, if you think there’s a possibility interest rates could rise, you may opt for a shorter-term bond or variable rate account, such as an easy access or notice savings account, instead.

Alternatives to a four-year fixed rate bond

Four-year fixed rate ISAs offer an alternative to a four-year bond which may appeal if you earn enough interest from your savings to be at risk of breaching the Personal Savings Allowance (PSA).

Any interest earned from Individual Savings Accounts (ISAs) is automatically tax-free, however, there’s a £20,000 annual limit on deposits into this type of account to bear in mind, known as the ISA allowance.

Alternative terms

Alternatively, depending on your goal and circumstances, you may want to consider a different term. Shorter-term options are also available, including bonds of less than a year, one-year bonds, two-year bonds and three-year fixed rate bonds.

Meanwhile, those looking to secure a fixed rate for longer could explore five-year bonds.