More like this

Fixed rate savings roundup

Written by Editorial Team
Last updated: 24th August 2022

Updated: 14/08/2015

The level of interest available on fixed rate bonds has risen slightly in recent months and with the talk of future interest rate rises firmly on the agenda, things could start to look better than they have done for quite some time. Here’s a roundup of the best deals we have currently on offer. We also include a couple of alternatives to traditional fixed rate bonds, which could be a option for those who would normally have chosen to lock their cash away for at least a few years and are available to both individuals and businesses, as well as charities and trusts.

Short term fixed rate bonds

For those looking for a short term fixed rate, Aldermore Bank currently offers a 1 Year Fixed Rate Account offering 2.00% gross/AER requiring a minimum deposit of just £1,000. No withdrawals are permitted during the term of the bond but it does have a monthly interest option.

Access Bank UK offers a market leading rate of 2.38% AER on their 2 Year Fixed Term Savings Bond however no additional deposit or withdrawals are permitted and interest, although calculated daily, is only paid at maturity. The minimum opening balance is £5,000. For those looking for a monthly interest option, Aldermore Bank’s 2 Year Fixed Rate Account pays 2.35% AER with a lower minimum of £1,000.

Medium term fixed rates

In the three to four year space, our top deal comes from Vanquis Bank offering 2.61% AER with their 4 Year Fixed rate Bond for those with between £1,000 and £250,000 to invest. This account has annual or monthly interest option but no withdrawals are permitted during the term. Leading our tables over three years is UBL’s 3 Year Fixed Term Deposit offering 2.50% AER. The minimum deposit is £2,000 and interest can be paid monthly, annually or at maturity into a UK bank account in your name.

Longer term fixed rate bonds

You still receive higher savings rates in return for locking your money away for longer, and so for those prepared to commit their savings for five years, UBL’s 5 Year Fixed Term Deposit is paying 3.04% AER. The minimum deposit is £2,000 and interest can be paid monthly, annually or at maturity into a UK bank account in your name.

This time last year…

Compared to our best one year fixed rate, UBL’s 5 year fixed rate equates to an additional 1.04% each year and an additional 0.54% when compared to their 3 year fixed term deposit. So although the market for fixed rates looking slightly more healthy than it did a few months ago, they are still pretty much exactly where they were this time last year.

Fixed rate bond alternatives

A structured deposit plan could offer an alternative to traditional fixed rate bonds. These plans combine capital protection with the potential to receive higher rates than available from fixed rate bonds and generally range from 3 to 6 years in duration, although some offer the opportunity to mature early or ‘kick out’.

The main difference between the two is that your return is normally dependent on the future performance of an index, typically the FTSE 100, and if the performance is not as required, you will only receive your capital back and no return. This is the trade off for the potential to receive higher returns.

Market roundup

Investec has recently launched their 4 Year Deposit Plan which offers a fixed return of 17% if the FTSE 100 finishes higher at the end of the term than it’s starting value. The upside is that the potential return equates to around 3.55% per year compound after charges, which is considerably higher than the best fixed rate deposits on offer. The downside is the rate is not fixed and if the FTSE ends lower, you only get your initial capital back and so would have been better off with a fixed rate.

The ability to mature early is a feature which is unique to structured products. Also available from Investec is their FTSE 100 Kick-Out Deposit Plan which offers a potential 4.5% per annum for each year the plan has been in force and will mature early at the end of each year (from year 3 onwards) provided the FTSE 100 Index finishes the year higher than it’s starting value.

Finally, for those who are happy to link their return to the stock market but who are not convinced the market will rise in the medium to longer term, Investec’s 6 Year Defensive Deposit Plan offers a fixed return of 34% even if the FTSE has fallen up to 10% between the start of the plan and its value at the end of the six year term (subject to averaging).

The minimum deposit for all three plans is £3,000. All are also available as Cash ISAs and accept ISA transfers. Arrangement fees apply.

Compare fixed rate bonds »

Compare alternatives to fixed rate bonds »


No news, feature or comment should be seen as a personal recommendation to invest. If you are at all unsure of the suitability of this type of investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.

Structured deposit plans are capital protected. There is a risk that the company backing the plan or any company associated with the plan may be unable to repay your initial investment and any returns stated. In this event you may be entitled to compensation from the Financial Services Compensation Scheme (FSCS), depending on your individual circumstances. In addition, you may not get back the full amount of your initial investment if the plan is not held for the full term. The returns from structured deposits are not guaranteed. The past performance of the FTSE 100 Index and any companies listed on the FTSE 100 Index is not a guide to future performance.

Tax treatment of ISAs depends on individual circumstances and may be subject to change in the future.

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 like this