Guide to fixed term savings accounts

Fixed rate savings accounts could help you grow your money faster. Learn more about how they work in our guide.

What is a fixed term savings account?

A fixed term savings account offers a set interest rate for a set period of time. They're also called fixed rate savings accounts or fixed term bonds.

 

They can offer higher interest rates than standard savings accounts but they come with terms and conditions - usually you can’t take your money out until the term ends.

 

You might have to pay tax on the interest you earn on your savings. Tax benefits depend on individual circumstances and could change in the future.

 

Sound good? If you already have a first direct 1st Account, you could open a Fixed Rate Savings Account with us today.

What is a fixed rate of interest?

Basically, it means your interest rate is set and won't be affected by any changes. 

 

For example, if you apply for an account with a 5% AER/Gross interest rate, you’ll get this until the term ends. This means you can work out how much interest you’re going to make on the cash before opening your account.

AER stands for Annual Equivalent rate. This shows you what the gross rate would be if interest were paid and compounded each year. 
Gross is the rate of interest paid before any tax (where applicable) has been deducted.

How does a fixed rate savings account work?

A fixed rate saver works similarly to a regular savings account, but there are a few key things to bear in mind:

 

  • you'll make a lump sum deposit to open the account

  • you’ll need to lock this cash away until the end of the term

  • you aren’t able to deposit any more cash throughout the term. If you want to save regularly, you might be better suited to another one of our savings accounts

  • you might be charged a fee if you want to withdraw your money.

What are the pros and cons of a fixed rate savings account?

Great for you if...

  • you're ok with locking away your money at a set interest rate
  • you want to be protected from rate changes
  • you can save a one-off lump sum of money

Not for you if...

  • you'd like to add more money to your account throughout the term
  • you want easy access to your money
  • you'd like to put your money elsewhere if interest rates change

Fixed rate savings FAQs

Feeling inspired to save?

Check out the savings accounts available at first direct. 

Eligibility criteria and T&Cs apply to each savings account. You must hold a first direct 1st Account, be aged 18 years or over and a UK resident to apply for any of our savings accounts.

Compare savings accounts

Your eligible deposits with HSBC UK Bank plc are protected up to a total of £85,000 or up to £170,000 for joint accounts, by the Financial Services Compensation Scheme, the UK's deposit guarantee scheme.

 

This limit is applied to the total of any deposits you have with the following: HSBC UK Bank plc and first direct. Any total deposits you hold above the limit between these brands are unlikely to be covered.