2 Year Fixed Rate Bonds

Compare 2 Year Fixed Rate Bonds

ProviderAccountInterest RateTermApply
5.00%Current Account
Instant Access
More Info >
5.00% interest for 12 months on balances up to £2,500 for the first year. You must pay in £1,000 or more each month to receive interest (excluding transfers from any Nationwide account held by you or anyone else). 12 month fee-free arranged overdraft available. No monthly fee. Must be aged 18 or older.
5.00%Current Account
Instant Access
More Info >
5.00% interest on balances up to £2,000 PLUS 5% cashback on first £100 of Contactless payments every month. Must pay in a minimum of £500 into the account each month. No monthly account fee.

2.01%

per annum

£500More Info >
Earn 2.01% fixed interest. 5 year term. Interest can be paid monthly or annually. Minimum deposit £500, Maximum deposit £250,000. No withdrawals permitted. FSCS Protected

1.80%

per annum

£1,000More Info >
Earn 1.80% gross/AER fixed for 4 years. Save £1,000 - £250,000. No withdrawals during the term. Individual or joint accounts available. Annual or monthly interest.

1.61%

per annum

£500More Info >
Earn 1.61% fixed interest. 3 year term. Interest can be paid monthly or annually. Minimum deposit £500, Maximum deposit £250,000. No withdrawals permitted. FSCS Protected

1.53%

per annum

£500More Info >
Earn 1.53% fixed interest. 2 year term. Interest can be paid monthly or annually. Minimum deposit £500, Maximum deposit £250,000. No withdrawals permitted. FSCS Protected
1.50%Current Account
Instant Access
More Info >
Monthly Interest of 1.50% AER (variable) payable on your entire balance up to £20,000 (3.0% AER until 1st November 2016). Monthly Cashback on selected household bills. Must pay in £500 into the account each month.

1.35%

per annum

£500More Info >
Earn 1.35% fixed interest. 1 year term. Interest can be paid monthly or at maturity. Minimum deposit £500, Maximum deposit £250,000. No withdrawals permitted. FSCS Protected
1.00%Instant AccessMore Info >
MARKET LEADING: Earn 1.00% gross/AER Instant Access. No notice periods. Unlimited payments and withdrawals. Pay in from £100. RCI Bank are protected up to a total of €100,000 by the FGDR, the French deposit protection scheme. Manage account online.
1.00%Current Account
Instant Access
More Info >
Innovative new banking service powered by Clydesdale and Yorkshire Banks. Get your current account and instant access savings account working together. Earn 1% AER on ALL instant access credit balances, and 0.5% AER on current account balances up to £2,000 until 30 November 2016. From 01 December 2016 the rate will be 0.25% AER (0.25% gross p.a. variable). INTRODUCTORY OFFER: Free for the first 12 months.

0.95%

per annum

1 YearMore Info >
0.95% gross/AER fixed for 1 year. £1,000 minimum opening balance. Withdraw cash early if you need to (subject to loss of interest).
0.75%Easy AccessMore Info >
Earn 0.75% tax free/AER variable. Open with £100. Unlimited free withdrawals. Transfer in ISAs held elsewhere - no limit
0.75%Easy AccessMore Info >
0.75% gross/AER on balances from £1,000 to £1 million. Guaranteed to be at least 0.50% above Base Rate** until 31st December 2017. Unlimited withdrawals without restriction or loss of interest.
Latest Deals
ProviderAccountInterest RateTermApply
5.00%Current Account
Instant Access
More Info >
5.00% interest for 12 months on balances up to £2,500 for the first year. You must pay in £1,000 or more each month to receive interest (excluding transfers from any Nationwide account held by you or anyone else). 12 month fee-free arranged overdraft available. No monthly fee. Must be aged 18 or older.
5.00%Current Account
Instant Access
More Info >
5.00% interest on balances up to £2,000 PLUS 5% cashback on first £100 of Contactless payments every month. Must pay in a minimum of £500 into the account each month. No monthly account fee.

2.01%

per annum

£500More Info >
Earn 2.01% fixed interest. 5 year term. Interest can be paid monthly or annually. Minimum deposit £500, Maximum deposit £250,000. No withdrawals permitted. FSCS Protected

1.80%

per annum

£1,000More Info >
Earn 1.80% gross/AER fixed for 4 years. Save £1,000 - £250,000. No withdrawals during the term. Individual or joint accounts available. Annual or monthly interest.

1.61%

per annum

£500More Info >
Earn 1.61% fixed interest. 3 year term. Interest can be paid monthly or annually. Minimum deposit £500, Maximum deposit £250,000. No withdrawals permitted. FSCS Protected

1.53%

per annum

£500More Info >
Earn 1.53% fixed interest. 2 year term. Interest can be paid monthly or annually. Minimum deposit £500, Maximum deposit £250,000. No withdrawals permitted. FSCS Protected
1.50%Current Account
Instant Access
More Info >
Monthly Interest of 1.50% AER (variable) payable on your entire balance up to £20,000 (3.0% AER until 1st November 2016). Monthly Cashback on selected household bills. Must pay in £500 into the account each month.

1.35%

per annum

£500More Info >
Earn 1.35% fixed interest. 1 year term. Interest can be paid monthly or at maturity. Minimum deposit £500, Maximum deposit £250,000. No withdrawals permitted. FSCS Protected
1.00%Instant AccessMore Info >
MARKET LEADING: Earn 1.00% gross/AER Instant Access. No notice periods. Unlimited payments and withdrawals. Pay in from £100. RCI Bank are protected up to a total of €100,000 by the FGDR, the French deposit protection scheme. Manage account online.
1.00%Current Account
Instant Access
More Info >
Innovative new banking service powered by Clydesdale and Yorkshire Banks. Get your current account and instant access savings account working together. Earn 1% AER on ALL instant access credit balances, and 0.5% AER on current account balances up to £2,000 until 30 November 2016. From 01 December 2016 the rate will be 0.25% AER (0.25% gross p.a. variable). INTRODUCTORY OFFER: Free for the first 12 months.

0.95%

per annum

1 YearMore Info >
0.95% gross/AER fixed for 1 year. £1,000 minimum opening balance. Withdraw cash early if you need to (subject to loss of interest).
0.75%Easy AccessMore Info >
Earn 0.75% tax free/AER variable. Open with £100. Unlimited free withdrawals. Transfer in ISAs held elsewhere - no limit
0.75%Easy AccessMore Info >
0.75% gross/AER on balances from £1,000 to £1 million. Guaranteed to be at least 0.50% above Base Rate** until 31st December 2017. Unlimited withdrawals without restriction or loss of interest.
2 Year
Provider

Account

Type

Minimum

Deposit

Interest

Rate
 

£500

1.53%

AER fixed

More Info >
  • Earn 1.53% AER for deposits between £500 and £250,000.
  • Minimum opening balance of £500; maximum balance £250,000.
  • Interest paid monthly or annually
  • Covered by the FSCS (Financial Services Compensation Scheme)
  • Must be UK resident and aged 18 or older
  • No withdrawals permitted.

£1,000

1.52%

AER fixed

More Info >
  • Earn 1.52% AER 
  • Minimum opening balance of £1,000
  • Interest paid annually
  • Available as a single or joint account
  • Covered by the FSCS (Financial Services Compensation Scheme)
  • Must be UK resident and aged 18 or older
  • No withdrawals permitted.
£1,000

1.50%

per annum

More Info >
  • Earn 1.50% AER for deposits between £1,000 and £200,000.
  • Minimum opening balance of £1,000; maximum balance £200,000.
  • Interest paid monthly, quarterly or at maturity
  • Available as a single or joint account
  • Covered by the FSCS (Financial Services Compensation Scheme)
  • Must be UK resident and aged 18 or older
  • No withdrawals permitted.

£2,000

1.45%

AER fixed

More Info >
  • Earn 1.45% gross/AER fixed for 2 years
  • Save from £2,000
  • Interest paid monthly, annually or on maturity
  • Covered by the FSCS (Financial Services Compensation Scheme)
  • Must be UK resident and aged 18 or older
  • Withdrawals not permitted during the term

 

£1,000

1.35%

per annum

More Info >
  • Earn 1.35% AER/gross fixed for 2 years
  • Minimum opening balance of £1,000; maximum balance £1,000,000
  • Interest paid monthly or annually
  • Unlimited top-ups for the first 30 days
  • Covered by the French Depositor Compensation Scheme
  • Must be UK resident and aged 18 or older
  • No withdrawals permitted before the end of the term
£1,000

1.25%

per annum

More Info >
  • Earn 1.25% gross/AER fixed for 2 years
  • Save from £1,000 - £250,000
  • No withdrawals
  • Individual or joint accounts available
£1,000

1.15%

per annum

More Info >
  • Manage your account online
  • Covered by the FSCS (Financial Services Compensation Scheme)
  • Must be UK resident and aged 18 or older
  • Minimum opening balance of £1,000
  • No withdrawals

Gross is the interest you will receive before tax is deducted.

AER stands for the Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once each year.

More Fixed Rate Bond Alternatives
ProviderPlan NameDeposit TakerISA OptionTermMaximum Potential ReturnMore Info
Retirement Deposit PlanInvestec Bank plcyes6 years

3.75%

per year, plus 22.5% at end of term

More Info >
  • 3.75% annual payments from capital
  • 77.5% remainder of initial deposit paid at end of term
  • Potential 22.5% growth return at end of term, if the Index is higher than 90% of Initial Value
  • Capital protected
  • Low minimum - £3,000
  • Short/medium alternative to fixed rates
  • Available for Cash ISA and  ISA Transfers 
  • Covered by the FSCS (Financial Services Compensation Scheme)
  • Limited offer - deadlines apply. May close early if oversubscribed
  • Only available for new ISA investments or ISA transfers, not direct investments
  • Plan designed to be held for full term
  • Arrangement fee applies
  • Returns not guaranteed. You may only receive a return of your original capital
6 Year Defensive Deposit PlanInvestec Bank plcyes6 years

24%

at end of term

More Info >
  • 24% fixed return if the Index is higher than 95% of its Initial Level
  • Capital protected
  • Low minimum - £3,000
  • Medium/longer term alternative to fixed rates
  • Available for Cash ISA,  ISA Transfers and non-ISA
  • Covered by the FSCS (Financial Services Compensation Scheme)
  • Limited offer - deadlines apply. May close early if oversubscribed
  • Plan designed to be held for full term
  • Arrangement fee applies
  • Returns not guaranteed. You may only receive a return of your original capital
4 Year Deposit PlanInvestec Bank plcyes4 years

12%

at end of term

More Info >
  • 12% fixed return if the Index is higher
  • Capital protected
  • Low minimum - £3,000
  • Short/medium alternative to fixed rates
  • Available for Cash ISA, ISA Transfers and non-ISA
  • Covered by the FSCS (Financial Services Compensation Scheme)
  • Limited offer - deadlines apply. May close early if oversubscribed
  • Plan designed to be held for full term
  • Arrangement fee applies
  • Returns not guaranteed. You may only receive a return of your original capital
Kick Out Deposit PlanInvestec Bank plcyesUp to
6 years

3%

per annum

More Info >
  • 3% for each year if the FTSE 100 finishes higher than its starting value
  • Opportunity to mature early at year 3, 4 or 5
  • Capital protected
  • Short/medium term alternative to fixed rates
  • Available for Cash ISAs, ISA transfers and non-ISA
  • Covered by the FSCS (Financial Services Compensation Scheme)
  • Limited offer - deadlines apply. May close early if oversubscribed
  • Plan designed to be held for full term
  • Arrangement fee applies
  • Returns not guaranteed. You may only receive a return of your original capital 

Important Information: Structured deposits offer you the potential to earn higher returns than you would with a regular savings account. Your returns are based on the performance of an index or commodity. If the investment does not perform well you may receive no income or capital growth, but you can be confident that your capital will be repaid. You have no access to your deposit during the term of the account, typically 3 to 6 years but your original capital will be repaid in full at the end of the term. In the event that the deposit taker is unable to repay your initial investment and any returns stated you may be entitled to compensation from the Financial Services Compensation Scheme (FSCS) depending on your individual circumstances.

What to look for when selecting a 2 Year Fixed Rate Bond?

There are a number of options for savers when looking for a home for your money from instant access savings accounts, easy access savings accounts, notice savings accounts, fixed rate bonds and structured deposit plans. While instant access and easy access and notice accounts provide very short term solutions if you are prepared to tie up capital for a set period of time a fixed rate bond could be right for you. Different terms are available  with many savings providers offering 1 year, 2 year, 3 year and 5 year fixed rate bond options. 4 year fixed rate bonds are less commonly available.

 

  • For savers who are prepared to lock capital away for a 2 year period, a 2 year fixed rate bond will generally offer a higher rate of interest than a shorter term account. Some providers offer 2 year fixed rate cash ISAs so you benefit from tax free interest returns.
  • 2 year fixed rate bonds normally have a minimum subscription age of 18 but some providers offer fixed rate bonds to younger savers.
  • Normally there is a minimum commitment for depositing money into a 2 year fixed rate bond - usually around £1,000, but this can be more.
  • With a 2 year fixed rate bond savings providers do not normally allow you to access your money during the savings term and if they do there are normally conditions which may involve a loss of interest so ensure you read the terms and conditions before you sign up. Some fixed interest providers will allow withdrawals during the two year term but there may be interest penalties.
  • The savings interest you earn during the 2 year fixed term is treated as income and you may have to pay tax on it depending on your circumstances. If you don’t pay tax you can receive interest gross if you complete HMRC tax form R85 which is available from your savings provider or directly from HMRC. Some fixed rate savings accounts will pay interest gross and it is up to you to declare any tax owed to the Inland Revenue. Some 2 year fixed rate bonds pay interest monthly, quarterly, annually or on maturity which allows you to plan you tax planning.
  • Fixed rate bonds are cash deposit based and you will get back your original deposit plus any interest owed unless the bank or building society gets into serious financial difficulty. In the unlikely event that the fixed rate bond provider defaults the FSCS (Financial Services Compensation Scheme) would pay compensation of up to £85,000 per account holder per authorised institution. 

 

Features of 2 Year Fixed Rate Bonds

Essentially, the length of the bond determines how much interest will be paid. See our tables above for latest 2 year fixed rate bond deals. Some fixed rate bonds pay interest on maturity rather than on a monthly or annual basis and in this respect the tax you pay will be determined by your tax status at that point. This can be useful for tax purposes if you know your tax status is going to change in future.

 

The length of term you opt for should be carefully considered. If there is a chance you may need your capital earlier before the two year term is up consider a shorter deposit term. If you need rapid access to your cash, a 2 year bond is probably not the best option.

 

Minimum deposits usually start from £500. It is important to note that some 2 year bonds don't allow you to top up your money during the fixed term so check the terms and conditions if this is important to you.

 

Withdrawals are either not permitted or restrictions will apply. Read the bond provider terms and conditions so that you know what you are getting into. Some bond providers for example will allow withdrawals during the bond term though penalties may apply. 

 

Top tips for finding the best 2 year fixed rate bonds in 2016

  • Interest Rates are changing all the time Consider all options – from instant access to fixed rate bonds to Cash ISAs - All have advantages and disadvantages when trying to build a nest egg for the future.

  • Shop around the savings market - Fixed rate bond interest rates are changing all the time and deals on fixed rate bonds come and go.

  • The choice of 2 year fixed rate bond bond is principally dependent on the amount of money you intend to save and the rate of interest, and the length of the fixed rate period. Other factors might include how you want the bond to be operated on an online account basis, postal basis or telephone basis. These should all be taken into consideration before making your choice. Read the savings bond provider terms and conditions carefully.

  • Read the small print – determine when the provider is likely to let you access your money, how much notice is required, and if there are any penalties for requesting access before the 2 year fixed rate bond matures.

  • Check that your money is covered by the Financial Services Compensation Scheme – they will guarantee £75,000 of savings against institutional failure. Most UK banks should have this cover.

  • Savings bond providers will write to you when your account matures; if you do not respond within a certain time the provider will often put your savings into a low or no interest holding account until you provide instructions on what you want to do with the money. It is therefore important to diarise the maturity of your fixed rate bond and have in mind what you want to do with the maturity proceeds.

Compare 2 year fixed rate bonds

 

A 2 year fixed rate bond works on the basis that the customer commits a set amount of money to the agreement over a 2 year period. Once this period is up, the customer is then allowed to collect their investment along with the accrued interest that has built up.

 

It is important to remember however that unlike many other types of savings accounts, money that is invested into a 2 year fixed rate bond may usually not be accessed by the customers until the period has come to a close. Customers should therefore consider their financial situation before committing to an agreement of this nature.

 

Compared with some other types of fixed rate bonds, a 2 year bond may be considered to be a relatively short term option. Although their interest rates may not be quite as high as those offering longer terms, customers may be provided with the relative freedom of quicker access to their money compared to a longer, 5 year agreement, for example.

 

A 2 year fixed rate bond may also be offered with several different options and benefits. Some providers may offer this product with what are known as tiered interest rates. This allows customers who can deposit the highest amounts to earn higher interest rates.  

 

Advantages of Fixed Rate Bonds

  • The interest rate offered is guaranteed for the 2 year term of the bond. This is unlike instant access savings accounts where the interest rate can go down or up at short notice.
  • Different banks and building societies will have different views on medium to long term interest rates. If interest rates rise more slowly than expected a fixed rate bond may give you a better return than what you could expect from an instant access account.
  • Some fixed rate bonds provide flexibility e.g. 1 withdrawal over the term.
  • Fixed rate bonds range from 2 months to 5 years in duration so you can choose a term that suits your circumstances
  • Many fixed rate bond providers offer online access so you can see how much interest you are earning.

 

Disadvantages of Fixed Rate Bonds

  • The benefit of enjoying a higher rate of interest must be weighed against tying up your capital for a fixed term. If you need access to your capital before maturity this may not be possible and if it is there may be interest penalties.
  • If interest rates rise over the term of the investment you may find the interest rate on your capital is no longer competitive compared to new offerings in the market.
  • Many fixed rate bond providers require a high minimum deposit e.g. £5,000