1 Year Fixed Rate Bonds

• Earn a competitive fixed interest rate for a year
• Lock away a single lump-sum on our marketplace, with no fees
• Deposit protection keeps your money safe

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Should you choose a 1 year fixed rate bond?

If you have a lump sum of money that you can lock away for a year, you may find that you can get a higher interest rate through a 1 year fixed rate bond (also known as a fixed term deposit) than you would typically get with an ISA or easy access account

Fluctuating interest rates and an unprecedented global pandemic might have made it harder to find competitive savings account interest rates. With a 1 year fixed rate bond, you can lock yourself in for a year of fixed interest rate earnings, free of concerns about what’s going on in the world.

1 Year Fixed Rate Bonds1 Year Fixed Rate Bonds1 Year Fixed Rate Bonds

What are 1 year fixed rate bonds?

A 1 year fixed rate bond is a savings account you can open a single lump sum and earn a fixed interest rate for one year. No matter what happens to the Bank of England base rate or the interest rate of other savings accounts, the rate on your fixed rate savings will stay the same for 12 months.

You can also apply for fixed rate bonds with different terms, including six month, two year, three year and five year fixed rate bonds.

You may hear fixed rate bonds referred to as fixed term deposits, fixed rate savings, savings bonds or fixed rate savings accounts; these terms all refer to the same type of savings account.

How do 1 year fixed rate bonds work?

You open a fixed rate savings account by depositing a single lump sum that is locked in for the duration of your term, meaning you can’t access your money until your maturity at the end of your bond term. 

The amount of interest you could earn from a fixed rate bond is advertised as an annual equivalent rate (AER), and how much you can earn depends on a few things:

  1. How long your fixed rate lasts for; twelve months, in this case
  2. How much you deposit
  3. The annual equivalent rate (AER)
  4. How the bank pays out interest

Most 1 year fixed rate bonds have a minimum cash deposit amount, generally between £500 and £1,000. There’s usually also a maximum deposit amount, which for some banking groups can go as high as £2,000,000, but it’s important to keep in mind that deposit protection schemes such as the FSCS only protect deposits into savings accounts up to £85,000 per person, per banking group. At Raisin UK, we only allow you to open a savings account with an amount that’s within the applicable deposit protection limit.

If you’re a basic rate taxpayer, you can earn interest of up to £1,000 per year without having to pay tax on that interest. For higher-rate taxpayers, that’s reduced to £500 per year.

Finally, there’s no limit to how many fixed rate bonds you can open. The FSCS only protects savings account deposits in savings accounts offered by UK regulated banks up to £85,000 per person, per banking group. Keep in mind that each savings account you open with one bank or banking group contributes to this total figure, and the FSCS won’t protect anything that exceeds this amount.

Who should get a 1 year fixed rate bond?

One year fixed rate bonds are a short-term investment, making them a good choice if you don’t want to be without access to your cash over a long period. They don’t typically offer the same competitive interest rates as longer-term fixed rate bonds, but they do normally offer better returns than an ISA. If you want a guaranteed return on a year-long investment and know how much interest you’ll earn, a 1 year fixed rate bond may be right for you.

Are there other fixed terms available?

Yes, at Raisin UK there are a few fixed rate savings accounts to choose from. These are:

6 Month Fixed Rate Bonds

1 Year Fixed Rate Bonds

2 Year Fixed Rate Bonds

3 Year Fixed Rate Bonds

What are the benefits of 1 year fixed rate savings?

1 year fixed rate accounts can be very beneficial, especially if you’re in a position to deposit a lump-sum that you don’t need to access for twelve months:

  • Your interest rate is fixed for one year 
  • You are certain of the interest you’ll earn
  • You know how long your savings period lasts for
  • You can protect your savings from interest rate changes
  • Accounts are typically free to open (they are at Raisin UK)

How is interest paid on 1 year fixed rate bonds and how much interest can I expect to earn?

Interest on your 1 year savings bond is typically paid out on maturity, i.e. at the end of your one-year term, meaning you won’t have access to your interest until your maturity date. At Raisin UK, the interest you earn is paid either into your Raisin UK Account or straight back into your savings.

How do I get the best interest rate on a 1 year fixed term bond?

In the current climate of low interest rates, a one year fixed rate bond will typically give you a more competitive rate of return than most other savings accounts, such as notice accounts or easy access accounts. To find the best one year fixed rate bond for you, you should compare bonds from different providers.

How do I compare fixed rate bonds?

You can compare fixed rate bonds using online comparison tools. Raisin UK offers an effective, easy to use comparison table that lets you browse one year fixed rate bonds from 10 different banks.

What to consider when comparing fixed rate bonds

Important things to consider when comparing fixed rate bonds include the following:

  • The interest rate
  • How much your lump sum deposit will be
  • How long you can lock your money away for
  • What your savings targets are 

Our best 1 Year Fixed Rate Bond rate is 1.01% AER

At Raisin UK, we work with a range of partner banks to offer the best rates possible across all of our products. Currently (Aug 2021) we offer the best rate on a one year fixed rate bond when compared with large high street banks.

How do I find the best 1 year fixed bond for me?

Finding the best 1 year fixed rate bond for you ultimately depends on your savings goals and how much money you’re able to lock away. Before deciding which fixed rate bond to open, consider the following questions: 

How long can I afford to lock away my money? Most fixed rate bonds only allow you to access your money at the end of your fixed term.
Is the interest rate going to give me what I want? One of the advantages of fixed bonds is that you can calculate the amount of interest you’ll earn and whether you’ll hit your savings target before you even open the account.
Do I have enough money to open a fixed rate bond? You need a lump-sum to open a fixed rate bond, typically £1,000 or more, depending on the account you choose.
Does the interest payment method work for me? Depending on the fixed rate bond you choose, your bank may pay interest monthly or in a lump sum at the end of your fixed term.

How much money do you need to open a fixed rate bond?

How much you need to open a fixed rate bond differs between banking groups, but typically, the minimum deposit amount is £1,000 and the maximum is £85,000. Keep in mind that the larger your lump sum, the more interest you’ll earn, and you can’t top up your balance once your fixed rate bond is open. 

How much can I invest in a 1 year fixed rate bond?

You can typically invest anything from as little as £1 or as large as £1,000,000 into one year fixed term savings, but you need to bear in mind that only up to £85,000 per person, per banking group is protected by the Financial Services Compensation Scheme in the unlikely event that your account provider fails. It’s also important to note that the more you can deposit, the greater your return will be.

Is your money safe in 1 year fixed rate bonds?

The Financial Services Compensation Scheme (FSCS) provides deposit protection of up to £85,000 of deposits into savings accounts offered by UK regulated banks if the bank fails and is unable to return your deposit.

It’s critical to ensure that you receive adequate deposit protection. All of the savings accounts from UK banks you can open through Raisin UK include FSCS deposit protection.

How is interest paid on a 1 year fixed rate bond and how much interest can I expect to earn?

Interest on your 1 year savings bond is typically paid out on maturity, i.e. at the end of your one-year term, meaning you won’t have access to your interest until your maturity date. At Raisin UK, the interest you earn is paid either into your Raisin UK Account or straight back into your savings.

What happens when the term of my 1 year fixed rate bond ends?

When you reach the end of your 1 year term, you have a couple of choices. You can either withdraw your original lump sum and any interest you’ve earned and close the account, or you can move your savings to another account. 

At Raisin UK, you can renew your fixed rate bond either with your original deposit and the interest you’ve earned, or you can withdraw your interest and renew with your original deposit amount only.

 

How long does it take to get my money from a 1 year fixed rate bond?

As your bond nears its ‘maturity’ date, or the end of the agreed term, you’ll receive a letter from your account provider asking you what you want to do with your money. Your options will usually include reinvesting the money into another fixed rate bond, transferring the funds to a nominated bank account or cashing in your bonds by cheque. 

There will usually be a form for you to fill out to choose your preferred option. Once your account provider receives your form, it typically only takes a few days for you to receive your money. 

1 Year Fixed Rate Bonds FAQs

Good alternatives to one year fixed rate bonds will differ from person to person and your own individual savings goals. However, if you’re looking for the same low-risk factor and a guaranteed return on your savings, you might want to consider notice accounts or easy access accounts.

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Providing your financial institution is protected by the FSCS, up to £85,000 of your money is protected in the event of their failure. Fixed rate bonds also provide little to no risk in the sense that you will always get your money, and a little bit extra, back when they mature.

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The interest you earn on your one year fixed rate bonds will be taxable, but only when it exceeds your personal savings allowance. For basic rate taxpayers, this amount is £1000, while higher rate taxpayers have an allowance of £500.

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The majority of one year fixed rate bonds only allow you to deposit money when you open your account. For accounts that you can top up, you might want to consider other types of savings accounts that allow you to pay money into regularly.

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You may be able to find a fixed rate bond that will allow you to withdraw money early, but this isn’t typical and you will usually be charged a fee.

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You will pay money into your one year fixed rate bond in the form of a deposit when you open your account. Most fixed rate bonds don’t allow you to add any more money, so if you want to save regularly, a notice account or an ISA might be a better option for you. 

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There’s no limit to how many fixed rate bonds you can open, but it’s important to keep your personal savings allowance in mind, because you’ll need to declare any amount that goes over it. For investment purposes, it might also be better for you to open fixed rate bonds of different terms, as we explored in the table above. 

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Most financial institutions registered in the UK are protected by the FSCS, but you can check that your account provider is covered by searching for them on the FCA Register. Note that FSCS protection covers up to £85,000 per person, per banking group, or £170,000 for a joint account.

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The 1 year fixed rate savings accounts at Raisin UK

Our marketplace provides a choice of 1 year fixed rate savings from different UK banks, all of which can be managed and accessed from one place, and all of which are free to open. Currently, the highest interest rate for a 1 year fixed rate bond through our marketplace is  1.31%  AER. 

If you’re not sure which savings account is most suitable for you or if you’d like something a little more flexible, check out the easy access or notice accounts from our partner banks.

To find the best 1 year fixed rate bond  account for you, compare 1 year fixed rate bonds in  the table above or register for a Raisin UK Account in just a few clicks. 

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