Fixed rate bonds under 1 year

If you’re looking to earn a competitive rate of interest on your savings but would rather save your money in the short term, a fixed rate bond of 3, 6 or 9 months could be a good option to consider. The interest rates on fixed rate bonds (also known as fixed rate accounts or fixed term deposits) are typically higher than those available with easy access savings accounts or notice accounts, with the added benefit of knowing that the rate won’t drop during your term – so it’s easy to calculate exactly how much interest you’ll earn by the time the savings account matures.

A fixed rate bond is a type of savings account that pays a set rate of interest for a set term length. Typically, fixed rate bonds of less than a year offer terms of 3, 6 or 9 months. Any money in a fixed rate bond is locked away for the specified term, meaning you won’t be able to access your cash during this period.

The rate of interest you earn on your savings won’t change during the term, irrespective of whether the Bank of England makes any changes to the base interest rate, meaning you'll know exactly how much you'll earn once the savings account matures.

If you decide that a 3 month fixed rate bond is the best option for you, for example, you’ll first need to deposit money into the chosen savings account. At Raisin UK, you can make as many transfers as you want to your Transaction Account until you reach your desired deposit, but once the savings account is open, you won’t be able to make any additional payments or top-ups. You also won’t be allowed to access your savings until the term is up and the bond matures.

As with many other types of savings accounts, there’s a minimum and maximum deposit when you open a fixed rate bond. The minimum deposit could be anything from £500, while the maximum deposit can be as high as £2,000,000. However, it’s important to be aware that only deposits up to £85,000 per individual, per banking group, are protected under the Financial Services Compensation Scheme (FSCS). That’s why most of the savings accounts you’ll find on the Raisin UK marketplace only allow you to deposit up to the £85,000 limit (or the European equivalent).

Let's say you decide to open a 6 month fixed rate bond. The amount of interest you’ll earn will be calculated as a yearly percentage, or annual equivalent rate (AER). How much interest you’ll receive depends on various factors, including:

• The amount you deposit;
• The interest rate (AER); and
• How the bank calculates interest.

Exactly when your interest will be paid depends on your chosen bank. Some institutions compound interest, while others pay at the end of the fixed term. It’s a good idea to check when and how interest is paid before you sign up for any new savings product.

With shorter term savings accounts like 3 month fixed rate bonds, 6 month fixed rate bonds and 9 month fixed rate bonds, you can earn a competitive rate of interest whilst being able to access your money within a year. What's more, you’ll know exactly what rate of return you’ll get – perfect if you want certainty from your savings. If you can afford to deposit a lump sum that you won’t need to access during the period, a shorter term fixed rate bond could benefit you in the following ways:

• Your interest rate is fixed for the period you choose.
• You’ll know how much interest you’ll earn during your term.
• Your deposit is protected from changes to the base interest rate.

Need more flexibility from your savings? If you can’t afford to lock away your savings for months, our notice accounts and easy access accounts may be a more flexible option.

When the term ends after 3, 6 or 9 months, your account will have matured. At this point, you can withdraw your savings, including any interest you’ve earned, and close the account. Alternatively, you can transfer your savings into another account or deposit the money into a new fixed rate bond with the same bank.

Yes, longer-term options are available if you can afford to lock your money away for more than nine months. At Raisin UK, we offer fixed rate bonds with one year, two year, three year, five year terms. The main benefit of longer durations is that they typically pay higher rates of interest, allowing you to earn more from your savings.

Generally, the best fixed rate bond for you will be the one that pays the most competitive interest rate for the lowest deposit amount. It’s also worth checking whether the bank offers compound interest, as this can help to grow your savings faster. To find the best shorter term fixed rate bond for you, you’ll need to compare savings accounts from across the market.

Take a look at the table at the top of this page to compare a range of fixed rate bonds available on the Raisin UK marketplace. Before you apply for any type of fixed rate bond, however, it’s important to review your budget plan and financial circumstances to ensure you can definitely afford to lock away a lump sum of money for a set period.

Yes, fixed rate bonds are a safe option for your savings. You won’t lose any money in a fixed rate bond and if you open an account with a regulated UK bank, you’ll have peace of mind that your savings will be protected by the FSCS. This covers deposits of up to £85,000 including interest per person, per banking group, or up to £170,000 for joint accounts. The majority of the fixed rate bonds available in our marketplace include deposit protection.

Savings with our European partner banks are also protected under the equivalent European Deposit Guarantee Scheme (DGS). It’s important to note that the FSCS limit applies to the total of the savings deposits you have within the same banking group. So even if you have multiple accounts with different brands, if they belong to the same group, you’ll still only be protected up to £85,000. You might therefore want to consider spreading your savings across different banking institutions if you have a particularly large sum of money you wish to deposit. At Raisin UK, we’ll always let you know which banking group a fixed rate bond is being offered by, so you can make an informed decision about which savings account is best for you.

To open a shorter term fixed rate bond with one of our partner banks, simply register for a Raisin UK account. It’s free to do and only takes a few minutes. You can then log in and compare a range of savings accounts with competitive rates of interest. Once you’ve made your decision, click to apply for a savings account that works for you. We’ll let you know when your application is approved, and you can then transfer your deposit, sit back and watch your savings grow.