Fixed Rate Bonds UK: Rates by Term, Early Access and Fixed vs Easy Access

A fixed rate bond pays a fixed rate of interest for a set term in return for leaving your money untouched until the end. The rate can’t be cut, which is the point: you trade access for a higher, guaranteed rate.

What fixed rate bonds pay now

These were the Bank of England’s average rates for August 2026, with the interest on £10,000 if it’s paid out each year:

These are averages: the best bonds pay more.

How a fixed rate bond works

• Opening: you pay in a lump sum at the start. Check how long the bond gives you to pay in, and whether you can add more later.
• Access: most bonds don’t allow withdrawals before the end of the term. Some allow it with a charge, for example a loss of interest. Check the terms before you open one, and only fix money you’re sure you won’t need.
• Interest: paid monthly, yearly or at the end of the term, depending on the bond. Compare bonds by their AER, which allows for how often interest is paid (what AER means).
• At the end of the term: the bond’s terms say what happens to the money if you don’t give instructions, often a move into another of the bank’s accounts, which may pay less, so decide in advance where it goes next.

Fixed or easy access?

On £10,000 for a year, the average 1-year bond paid £197 more than the average instant access account. Whether that’s worth it depends on three things:

1. Will you need the money during the term? If there’s a real chance, the penalty (or having no access at all) outweighs the extra interest. Keep an emergency fund in easy access first.
2. Where rates go next. A fixed rate protects you if rates fall and leaves you behind if they rise. Nobody knows which will happen; how interest rates affect savings explains what moves them.
3. Tax. The extra interest counts towards your Personal Savings Allowance, and a multi-year bond can bunch it into one year (below).

A fixed rate is the right choice for money set aside for a known date (a house deposit you’ll use in two years, say) or for savings you won’t touch. Easy access is the right choice for money you might need, or while you decide what to do with it.

When the interest is taxed

Interest is taxed in the tax year it’s paid to you or made available to you. For a fixed rate bond that means:

• if the bond credits interest each year and the terms let you draw on it (even with a penalty), the interest is taxed each year as it’s credited;
• if the bond pays all its interest at the end and you can’t get at it before then, all of it is taxed in the year the bond matures.

On a 3-year bond, the second kind can bunch three years’ interest into one tax year and take you over your allowance that year. Each tax year a basic rate taxpayer can earn £1,000 of savings interest tax-free, a higher rate taxpayer £500 and an additional rate taxpayer nothing; your band is worked out with your interest added to your other income. A fixed rate cash ISA avoids the question: the interest is tax-free whenever it’s paid.

Laddering

Laddering means splitting savings across bonds that end at different times, so some money becomes available regularly. For example, £30,000 split equally between a 1-year, a 2-year and a 3-year bond gives you access to £10,000 each year. When each bond ends you can use the money, or reinvest it for the longest term in the ladder at whatever rate is on offer then.

A ladder gives up a little rate against putting everything in the longest term, in return for regular access and not having to guess which term is best. If your ladder uses several banks, check they don’t share an FSCS limit.

Related guides

• Savings accounts guide: the account types, average rates, tax and protection in one place
• How to find the best savings account: the benchmark and checks for any account
• Notice accounts: a middle ground between easy access and fixed
• Compound interest calculator: what a lump sum grows to at a fixed rate