# What is a fixed-rate bond savings account?

> Quick answer · Last updated 4 July 2026

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## In short

A savings account that pays a set interest rate for a fixed term — often one to five years — in return for locking your money away. Rates are usually higher than easy-access accounts, but early withdrawals are often not allowed or carry heavy penalties.

Fixed-rate bonds pay a guaranteed rate for the whole term, which protects you if variable rates fall during the period. In mid-2026, one- and two-year bonds often beat easy-access rates by one percentage point or more, though the gap changes with Bank of England base rate expectations.

Most bonds do not allow withdrawals before maturity, or allow them only with a loss of interest. Minimum deposits range from £1 to £10,000 depending on the provider. Interest may be paid monthly, annually, or at the end of the term — monthly interest suits people who want income, while end-of-term compounding maximises total return.

Interest is taxable outside ISAs, counting towards your Personal Savings Allowance (£1,000 basic, £500 higher, £0 additional for 2026/27). Fixed-rate Cash ISAs offer the same lock-in with tax-free interest. Spread deposits across providers if your balance exceeds £85,000 per FSCS banking licence.

## Related

- [Personal Savings Allowance](https://moneyguide.org.uk/answers/what-is-the-personal-savings-allowance/)
- [Savings & ISAs guide](https://moneyguide.org.uk/savings/)

## Primary source

gov.uk/savings-accounts-compare

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Independent UK money guidance from [Money Guide](https://moneyguide.org.uk). Information only — not regulated financial advice.