Question 1

What is a fixed term savings account?

Accepted Answer

A fixed term savings account is another name for a fixed rate bond. Some providers may call these accounts fixed savers while others call them fixed bonds or fixed rate deposits, but they all essentially mean the same thing.
They are simply a savings account where savers can put away a lump sum for a certain period and earn a guaranteed rate of interest for several months or years, depending on the term you choose.

Question 2

Can I have more than one savings bond?

Accepted Answer

Yes, there’s no limit on the number of fixed rate bonds you can have so, theoretically, you can have as many as you want. For example, you could have multiple accounts with the same term length or a combination of shorter- and longer-term fixed bonds, either with the same provider or with different providers.

Question 3

Are fixed rate bonds tax-free in the UK?

Accepted Answer

The interest paid on a fixed rate bond is classed as taxable income, but many savers can earn up to a certain amount tax-free. You won’t need to pay any tax on a fixed bond if the interest earned on this (and any other non-ISA savings accounts) is within your Personal Savings Allowance (PSA). However, you’ll need to pay tax if the interest earned is above this limit. If you’re worried about breaching your PSA, you may want to consider fixed rate ISAs instead.

Question 4

When do you pay tax on fixed rate bonds?

Accepted Answer

You only start to pay tax on fixed rate bonds, or any other savings, if the total amount of interest you earn exceeds your Personal Savings Allowance (PSA). This is set at £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers. Additional-rate taxpayers don’t have an allowance.

Question 5

Are there any penalties for closing a fixed rate bond early?

Accepted Answer

Most fixed rate bonds won’t allow you to close your account or access your money early, unless there are exceptional circumstances such as serious illness or bankruptcy. If a provider does allow you to close an account before the end of the fixed term, there is likely to be a penalty charge for doing so.

Question 6

Are fixed rate savings bonds a good idea?

Accepted Answer

Fixed rate bonds can be a good idea if you have a lump sum of money you won’t need to use for a number of months or years. Putting it into a fixed rate bond means you’ll receive a guaranteed rate of interest for the specified length of time, protecting your money from any potential drops in savings rates.
However, a fixed rate bond is only a good idea if you can afford to lock away access to your savings and if you have sufficient money in an easy access account that you can withdraw from in an emergency. Ideally, experts say you should have between three- and six-months’ expenses in an emergency fund to cover any drops in income or unexpected repairs, for example.

Question 7

What’s the difference between a Government bond and a fixed rate savings bond?

Accepted Answer

A Government bond is essentially when you lend money to the Government and receive interest in return. It is a form of investment. By contrast, a fixed rate savings bond is a type of savings account that stores your money and pays a set amount of interest on your deposit. Unlike Government bonds, savings bonds are protected by the Financial Services Compensation Scheme (FSCS).

Question 8

Can I transfer my fixed rate bond to another provider?

Accepted Answer

Because you can’t typically access your money before the end of the term, you won’t be able to transfer a fixed bond to another provider. You will have to wait for the end of the fixed term before you can transfer your savings elsewhere.

Question 9

How long does it take to receive money from a fixed bond?

Accepted Answer

This depends on the provider and your preferences. Once a fixed bond matures, you may receive your money on the same day, or the next working day, for example. However, you may be able to choose to have your funds automatically deposited into a new fixed rate account, which means you wouldn’t have access to your money until the term ends on your new account.

Question 10

What are the best fixed rate bonds for over-60s?

Accepted Answer

There aren’t typically any fixed bonds that are specifically designed for older savers. As a result, the best account for over-60s will be the one that pays the highest rate and meets your individual requirements. For example, if savers aren’t comfortable managing their savings via a mobile app, they may prefer an account that pays a slightly lower rate but can be managed online or in branch rather than a higher-paying account that is only available via app. See our chart above for the latest rates and to compare the features of each account.

Question 11

What happens to fixed rate bonds upon death?

Accepted Answer

If an account holder dies, their next of kin (or executor of their estate) should contact the provider. The provider will typically release the money saved in the fixed bond, but the processes involved in this will depend on the provider and each individual situation.

Question 12

Can a fixed rate savings bond be used as collateral for a loan?

Accepted Answer

No, you can’t typically use your savings to act as collateral for a loan.

Best Fixed Rate Bonds