Eligible deposits with UK institutions are protected by the FSCS up to £120,000 per person per institution.
Who owns whom?
Find out which banks and savings account providers operate under which banking license with our who owns whom guide, helping savers work out to what degree their savings are protected by the FSCS.
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Interest Earned
This is an estimate of how much interest you could earn in the first year. It does not take into account your personal circumstances so the actual amount received may differ. The calculation is based on the gross rate; takes into consideration the interest paid frequency and includes the following assumptions:
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Five-year fixed bonds are a type of savings account that offer an interest rate guaranteed to remain the same for five years, in exchange for locking your money away for this length of time.
Some five-year bonds can be opened 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 save, it’s important to consider your initial investment carefully as withdrawals typically aren’t allowed.
Depending on the specific account and provider, you’ll receive any returns on a regular basis (e.g. monthly, yearly or on the anniversary of opening the account) or when the account matures. At this point you’ll regain access to your cash.
Rates are typically higher than with shorter terms as you’re agreeing to lock your money away, and so the provider will compensate you accordingly. Various factors can impact the rate offered, such as base rate, inflation and wider economic conditions, but bear in mind that this won’t affect the rate of an existing five-year bond as it won’t change for the duration of the term.
Note that you may be given the option of having the interest paid away – i.e. into another account – or compounded in the bond. Having interest paid away means you may be able to earn an income from your savings, but having it paid back in means you could earn more in the long run. You can find out more about compounding in our guide.
Many five-year fixed savings accounts accept further 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 ‘Product Specification’ next to a listing.
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 ‘Product Specification’ next to a listing on the chart above.
At the end of the term, you’re able to withdraw the funds and can pay it into any account you wish. The provider will write to you before maturity to explain your options; they may offer you a new bond with them, but while this may seem convenient, make sure to compare the latest top rates to be confident you’re getting the best deal. If you don’t notify the provider of your wishes, they’ll move the funds into an account of their choosing, which will typically be a variable rate deal.
The tax implications for a five-year bond are largely the same as for any other standard savings account – you have a £1,000 Personal Savings Allowance (£500 for higher rate taxpayers), and any interest you earn above this amount will be taxed at your usual rate. You can find out more about this in our guide to savings tax.
Savers might want to consider a five-year fixed bond if they have a lump sum they’re looking to grow which they won’t need to access for a number of years. It could be particularly suitable if they’ve got a specific event or purpose they’re saving for – such as a wedding or house move, for example – and want to use that lump sum to go towards it.
A fixed bond may also form part of someone’s five-year savings plan if they believe interest rates will drop in the future and want to lock in a competitive rate for as long as possible. This can offer additional security during times of fluctuation, but there’s of course the chance that rates could rise in the next five years and they’ll be locked into a lower-paying deal. It’s all about weighing up the risks alongside your expectations for the future.
However, before locking cash away, it’s important to have enough funds in an account that can easily be accessed in case of an emergency. Money in a five-year bond will rarely be accessible, so you’ll ideally want to make sure you have an easy access account (or similar) as well.
The interest rate is guaranteed to remain the same for five years.
Traditionally, five-year bonds offer higher rates than shorter terms and variable accounts.
Even if interest rates fall, your rate will stay the same, which means you could earn more overall.
Withdrawals are usually prohibited, meaning you won't have access to your cash for five years.
Some accounts won't allow you to add to your savings pot.
If interest rates rise in the five-year period, you’ll be locked into a lower-paying deal.
Five-year bonds typically offer higher interest rates than their shorter-term counterparts to compensate savers who risk missing out on better returns or losing value to inflation when locking their money away for the long term.
This pattern reversed in 2023 when the best rate paid by a one-year bond overtook that offered by a five-year fixed savings account. This was largely due to economic uncertainty generated by a variety of factors, including global conflicts and the COVID-19 pandemic, but more recently the gap has started to close and we’re getting back to a more traditional path of longer-term deals outpacing short-term options. Yet the gap remains smaller than it once was, so it’s vital to compare the options thoroughly to make sure you’re not locking your money away for longer for minimal benefit.
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 £120,000, 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.
You normally won’t find five-year bonds that are specifically designed for those over 60. Instead, the best 5 year savings account for someone aged 60 or above will likely be that which offers the highest interest rate while still meeting their needs and requirements.
Earning monthly interest from a five-year fixed could be a good way to supplement your income in retirement (when paid away into an accessible account). But, bear in mind that you usually won’t be able to draw upon your savings until the five-year term ends.
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. These operate in a similar way to five-year bonds but aren’t always as restrictive – you’ll normally be able to access your cash in an emergency, albeit with an interest penalty – and as with all Individual Savings Accounts (ISAs), any returns are automatically exempt from being taxed.
A Stocks and Shares ISA could be another option if you’re looking to grow a lump sum over a number of years and are open to investing. This type of account allows you to invest in the stock market and so 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.
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.
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