Best 5 Year Fixed Rate Bonds

How does a five-year fixed rate bond work?

Five-year fixed bonds offer an interest rate that is guaranteed to neither rise nor fall in exchange for locking away your savings for an agreed length of time. Depending on the account and provider, you’ll receive any returns on a regular basis (e.g. either monthly, yearly or on anniversary) or when the account matures - at which point you’ll regain access to your cash.

Some five-year fixed rate bonds can be applied for with as little as just £1, while others require a more substantial minimum deposit of £10,000 or more. Regardless of how much you’re looking to put away, be sure to consider your initial investment carefully, as withdrawals are not typically allowed.

Can you add money into a five-year fixed bond?

Whether you can add money to your five-year fixed savings account will vary from one provider to another. Many accounts accept deposits for a limited time after opening, but it’s not uncommon for some banks and building societies to impose greater restrictions (or prohibit further additions entirely).

To find out if you can add money to an account on our chart, select ‘view further details’ next to a listing.

Can you withdraw money from a five-year fixed rate bond before the term ends?

Most fixed bonds don’t allow you to access your cash before the account matures, so you’ll need to think carefully before making any deposits – particularly when it comes to longer-term bonds of five or more years.

That being said, some bonds may grant early access before the term ends subject to a loss of interest penalty and/or account closure. You can also discover whether an account permits early access by selecting ‘view further details’ next to a listing on the chart above.

Is a five-year fixed rate bond safe?

All of the five-year fixed bonds shown on our charts are covered by the Financial Services Compensation Scheme (FSCS), so you can be sure your money is safe if a provider were to go bust.

However, even though the FSCS protects deposits of up to £85,000, it’s important to remember this upper limit includes funds held with any provider operating under the same banking licence (and is not per account).

Check which banks and building societies share a licence with our who owns whom guide or visit the FSCS website for more information on what is covered.

Alternatives to a five-year fixed bond

If you earn enough in interest from savings to exceed your Personal Savings Allowance (PSA), you could opt for a five-year fixed rate ISA as an alternative. As with all Individual Savings Accounts (ISAs), any returns are automatically exempt from being taxed.

Meanwhile, a Stocks and Shares ISA could be another option if you’re looking to grow a lump sum over a number of years and open to investing. This type of account offers the possibility of greater returns than a cash ISA in the long-run, but it’s important to remember this comes at the risk of losing money, as returns are not guaranteed. Typically, you should aim to stay invested for at least five years.

Alternative terms

While five-year bonds offer some of the longest fixed terms on the market, other terms are available that can suit a wide variety of needs and circumstances.

For instance, if you’re uncomfortable locking away your funds for five years, why not consider a two-year bond, one-year bond or even a bond of less than a year? Alternatively, a three-year bond could offer a middle ground.