Use our fixed rate bond calculator to see exactly how much interest you will earn on your savings. Enter your deposit amount, the annual interest rate, and your chosen term to get a complete breakdown including total interest, effective annual rate, and a year-by-year schedule.
| Year | Opening Balance | Interest | Closing Balance |
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A fixed rate bond (also called a fixed term savings account or fixed term deposit) is a type of savings account where you agree to leave your money untouched for a set period in exchange for a guaranteed interest rate. Unlike variable rate savings accounts, the rate on a fixed rate bond cannot change during the term - you always know exactly what you will earn.
Fixed rate bonds are offered by banks, building societies, and challenger banks. They are not the same as government bonds (gilts) or corporate bonds traded on financial markets. The key feature is simplicity: deposit your money, wait for the term to end, and collect your principal plus interest.
Interest rates have settled at elevated levels following the Bank of England rate rises of 2022-2024. Here are the typical best-buy fixed rate bond rates available in 2025:
| Term | Typical Rate Range | Best Buy Rate | Notes |
|---|---|---|---|
| 1 Year | 4.2% - 5.0% | ~5.00% | Most competitive term currently |
| 2 Years | 4.1% - 4.8% | ~4.80% | Good value |
| 3 Years | 4.0% - 4.6% | ~4.60% | Solid medium-term option |
| 4 Years | 3.9% - 4.5% | ~4.50% | Less common |
| 5 Years | 3.8% - 4.5% | ~4.45% | Long-term security |
Rates correct as of February 2026. Always check the latest rates directly with providers or comparison sites such as MoneySavingExpert and Which?
The mechanics of a fixed rate bond are straightforward:
Fixed rate bonds offer different ways to receive your interest:
Interest from fixed rate bonds counts as taxable income in the UK. However, most savers will not pay tax due to the Personal Savings Allowance (PSA):
At 4.75%, a £21,053 deposit would generate £1,000 interest per year - the basic rate taxpayer PSA limit. On a £10,000 bond at this rate, the interest (£475/year) falls well within the PSA for most savers.
For larger sums or higher earners, consider a Cash ISA for tax-free interest.
Many providers offer fixed rate Cash ISAs which work exactly like fixed rate bonds but shelter your interest from tax entirely. The trade-off is that ISA rates are often slightly lower than equivalent non-ISA fixed bonds. If your total interest stays within your PSA, a regular fixed bond is simpler. If you are a higher earner or have substantial savings, a Cash ISA is usually better long-term.
When evaluating a fixed rate bond, consider the real return after inflation. If inflation runs at 3% and your bond pays 4.75%, your real return is approximately 1.75%. Use our inflation calculator to model this. Inflation erodes purchasing power, so locking in a good rate when inflation is falling can be advantageous.
National Savings and Investments (NS&I) offers government-backed fixed rate bonds (Guaranteed Growth Bonds and Guaranteed Income Bonds). These are 100% government guaranteed - not just up to £85,000 - making them appealing for larger sums. However, NS&I rates are not always the highest available. They are worth checking as part of your comparison, particularly for deposits over £85,000.
Top providers regularly appearing in best-buy tables include:
The choice between a fixed rate bond and an easy access savings account depends on your circumstances. Easy access accounts now pay competitive rates (often 4.5-5% in 2025), so the premium for locking money away has narrowed. Key considerations:
A fixed rate bond, also called a fixed term savings account, is a savings product where you lock your money away for a set period (typically 1-5 years) in exchange for a guaranteed interest rate. The rate does not change during the term regardless of Bank of England base rate changes.
In 2025, 1-year fixed rate bonds offer around 4.5-5%, 2-year bonds around 4.3-4.8%, and 5-year bonds around 4.0-4.5%. Rates vary by provider. NS&I, Atom Bank, Aldermore, and Paragon Bank regularly appear in best-buy tables.
Generally no. Fixed rate bonds require you to lock your money for the full term. Some providers allow early access with a significant interest penalty (often 90-180 days of interest). You should only put money in a fixed rate bond that you will not need during the term.
Yes, up to £85,000 per person per banking licence is protected by the Financial Services Compensation Scheme (FSCS). If the bank fails, your money up to this limit is guaranteed. If you have more than £85,000 to save, spread it across multiple providers.
Yes, interest from fixed rate bonds is taxable. Basic rate taxpayers have a Personal Savings Allowance (PSA) of £1,000 per year before paying tax. Higher rate taxpayers get £500 PSA. Interest above the PSA is taxed at your marginal rate. Using a Cash ISA avoids all tax on interest.
Fixed rate bonds usually pay higher interest than easy access accounts in return for locking your money away. In 2025, easy access accounts pay around 4.5-5% while top fixed bonds may pay up to 5%. The difference is smaller than in previous years, so the flexibility of easy access is more attractive now.
When your fixed rate bond matures, the provider will contact you with options. You can typically withdraw all funds, reinvest in a new fixed term bond, or transfer to another account. If you do nothing, funds are often moved to a lower-rate easy access account, so always act promptly at maturity.