Fixed rate bonds - everything you need to know
Fixed rates are at their highest level in 13 years. Find out how fixed rate bonds work, and how locking their cash away for a set period can give savers the best available returns on their savings.
Important information
This article gives you information to help you make the most of your money, but it isn’t personal advice. If you’re not sure if a certain action is right for you, please ask for advice.
Last Updated: 6 January 2023
Important information - This article gives you information to help you make the most of your money, but it isn’t personal advice. If you’re not sure if a certain action is right for you, please ask for advice.
People who don’t fix their cash get lower rates. And there are currently billions of pounds sat in accounts bearing no interest at all. But getting more from our savings doesn’t need to be complicated.
Below we take a closer look at fixed rate bonds and why you might consider them.
What are fixed rate bonds?
Fixed rate bonds, also known as fixed term bonds, are a type of savings option.
You put your money away for a set time, and in return, you get a fixed amount of interest on your cash. The length of time you can fix could range from a few months to several years, and the interest you get will depend on how long you fix.
This is because banks and building societies benefit from knowing your money will stay with them for a longer period.
How does a fixed rate bond work?
Fixed rate bonds offer the chance to get a better rate of interest on your savings. While the rate you get can depend on many factors, such as the provider you choose, the amount of cash you’re saving and the rates available at the time. Normally the longer you fix the better interest rate you’ll get.
And you don’t need to put all your money into one fixed rate. You can pick and mix different terms offering you the control and flexibility of when you need the money.
This is different to Easy Access savings which allow you to withdraw your money at short notice, but you’ll normally get a lower interest rate.
For example, as of 31 October 2023 the average easy access savings paid 2.73% and the average 2 year fixed rate paid 5.49% .
However, there are three key things to consider before putting your money into a fixed savings rate.
- You can't usually withdraw your money until the fixed term has ended. Therefore, we suggest you keep an emergency pot of three – six month’s worth of essential expenses in easily accessible savings (one – three years if you’re retired).
- The longer you fix, the more inflation could reduce your spending power.
- If interest rates rise, you could miss out.
How can HL help?
Searching for competitive rates can be time consuming. And setting up savings accounts with different providers can mean extra paperwork and multiple passwords.
That’s why we created Active Savings. In a few clicks, you can view, select, and switch between a variety of savings products, all through one online account. This includes easy access and fixed terms, typically ranging from 6 months to 5 years. This lets you make the most of your savings, without putting in the effort.
Opening an Active Savings account online only takes a few minutes. If you have other HL accounts, you will use the same login details.
Our banking partners often have market-leading rates, meaning they’re the most competitive rate on the market for a particular term. Though products are added and withdrawn all the time, so it’s important to keep checking for the latest rates available. And on occasion our banking partners offer premium savings products only available to existing Active Savings clients.
Find out more about Active Savings and discover how you can take back control of your savings.
The best rates on Active Savings
Easy access
Up to
4.75% | 4.65%
(AER | Gross)
Avg. market rate
2.73%
1 year
Up to
5.16% | 5.16%
(AER | Gross)
Avg. market rate
5.43%
2 years
Up to
5.05% | 5.05%
(AER | Gross)
Avg. market rate
5.49%
3 years
Up to
4.65% | 4.65%
(AER | Gross)
Avg. market rate
5.21%
Easy access
Up to
4.75% | 4.65%
(AER | Gross)
Avg. market rate
2.73%
1 year
Up to
5.16% | 5.16%
(AER | Gross)
Avg. market rate
5.43%
3 years
Up to
4.65% | 4.65%
(AER | Gross)
Avg. market rate
5.21%
Please note the products above are some of our most popular, but more are available. Click the link above to see our full range. Products can be added or withdrawn at any time. Minimum deposit requirements apply to individual products. Easy access products pay a variable rate and fixed term products pay a fixed rate.
Source: Bank of England 31 October 2023. Comparisons with average market rates for easy access products are based on instant access products, which allow immediate withdrawals. Active Savings offers easy access products and withdrawals usually take one working day.
AER (Annual Equivalent Rate) shows what the interest rate/expected profit rate would be if it was paid and compounded once each year. It helps you compare the rates on different savings products. Once you have opened a fixed term product the rate won't change, but rates on easy access products can vary.
Gross means the rate without any tax removed. Interest/profits are paid gross. You are responsible for paying any tax due on interest/profits that exceed your Personal Savings Allowance to HM Revenue & Customs. Tax treatment can change.
The savings of private individuals held with authorised banks and building societies are covered under FSCS. All of our partner banks are authorised by the Prudential Regulation Authority (PRA) and covered under FSCS.
This website is issued by Hargreaves Lansdown Asset Management Limited (company number 1896481), which is authorised and regulated by the Financial Conduct Authority with firm reference 115248.
The Active Savings service is provided by Hargreaves Lansdown Savings Limited (company number 8355960). Hargreaves Lansdown Savings Limited is authorised and regulated by the Financial Conduct Authority (firm reference number 915119). Hargreaves Lansdown Savings Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 with firm reference 901007 for the issuing of electronic money.
Hargreaves Lansdown Asset Management Limited and Hargreaves Lansdown Savings Limited are subsidiaries of Hargreaves Lansdown plc (company number 2122142).