Locked savings accounts explained

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Whether you struggle to save because you’re tempted to spend your money or you’re looking to earn a good return on a lump sum with minimal risk, you might want to consider a locked savings account.

Restricting access to your cash, locked savings accounts (also called no access savings accounts and fixed rate bonds), require you to lock away your money for a set period of time. On this page, find out more about locked savings accounts, how to compare this type of account and what the best no access savings accounts are.

Key takeaways
  • Fixed term: Locked savings accounts require you to tie up your money for a fixed period, which can typically range from six months to five years

  • Competitive interest: In return for locking away your savings, you’ll usually benefit from a more competitive interest rate

  • Risk-free growth: Locked savings accounts may be an ideal option if you’re looking for guaranteed growth with minimal risk, or you simply want to ring-fence your savings

What are locked savings accounts?

With locked savings accounts, the clue is in the name. They’re a type of savings account that ‘locks in’ your cash, meaning you won’t be able to access your money during the agreed term. In return, you’ll usually earn a higher interest rate.

A common form of locked savings accounts are fixed rate bonds. Fixed rate bonds are savings accounts that lock your money in at a fixed rate of interest for a specified amount of time, usually between six months and five years (more on those below).

The term you choose will depend on your personal savings goals. Whichever term you choose, a locked or no access account is a secure way to take advantage of competitive interest rates, especially if you have a low appetite for risk. 

Are locked savings accounts the same as no access savings accounts and fixed rate bonds?

Locked savings accounts are the same as no access savings accounts, while a fixed rate bond is an example of this type of account.

On this page, we use ‘locked savings account’, ‘no access savings accounts’ and ‘fixed rate bonds’ to mean the same thing. You can find out more about the different types of fixed rate bonds below, or by comparing fixed rate bonds on the Raisin UK marketplace.

How does a locked savings account work?

The way locked savings accounts work can be broken down into a few simple steps, as follows:

  1. You open your account by depositing a lump sum of money that you agree with the provider when you apply for the account

  2. Your money will then be locked away for the chosen term of your account while it accrues interest (you won’t have access to your money during this time and you won’t normally be able to add to your deposit)

  3. You can sit back and watch your money grow 

Another thing to know about the way no access savings accounts work is that they typically have minimum and maximum deposit amounts, usually between £500 and £1,000 for a minimum deposit and as much as £2,000,000 for a maximum deposit. 

At Raisin UK, our top priority is keeping your money safe, so the maximum amount you can deposit per savings account is £85,000 per person, per banking group, so that your money is protected by the Financial Services Compensation Scheme (FSCS).

What happens when the term of my account ends?

When your term ends, your account will have ‘matured’. At this point, you usually have to choose between one of these three options:

  1. Invest your money into another locked savings account
  2. Withdraw your funds
  3. Add to your funds and re-invest the entire amount.

Who are locked savings accounts right for?

Locked savings accounts are only really the right type of savings account for you if you can afford to lock away a lump sum without needing access to it. They also offer a low-risk alternative to volatile investment options such as stocks and shares. 

How long should I lock my money away for?

Typically, you’ll earn more interest the longer you can lock your money away in a no access savings account for. However, this isn’t always the case, and it’s important to compare no access accounts carefully. The length of time you choose to lock your money away depends on your financial goals and whether you’ll need access to your money during your term.

What kind of locked savings account terms are available?

Despite recent increases, interest rates are still relatively low, following the financial fallout of the pandemic. This has seen UK savers opt for all different types and terms of locked savings accounts due to uncertainty about whether or not the interest rate is going to rise or fall, and on what timescale.

The following are the most common types of locked savings accounts in the UK: 

6 Month Fixed Rate Bonds

6 month fixed rate bonds are typically the shortest term no access account available, which often means they offer lower interest rates than longer-term options (but typically still a more competitive rate than more flexible savings account types). They can be a good choice if you want to grow your money more quickly without locking it away for a longer period of time. 

1 Year Fixed Rate Bonds

1 year fixed rate bonds are short-term fixed term savings accounts that can feature competitive rates of interest. They allow you to grow your money and benefit from a bonus, providing you adhere to the account terms. 

2 Year Fixed Rate Bonds

2 year fixed rate bonds are one of the most common forms of no access savings accounts, typically offering competitive interest rates and the opportunity to grow your savings pot on a fairly short yet manageable timescale.

3 Year Fixed Rate Bonds

3 year fixed rate bonds typically offer savers slightly higher rates of interest than 1 and 2 year no access accounts, as your money is locked away for longer. 

5 Year Fixed Rate Bonds

5 year fixed rate bonds typically offer the biggest return on your investment due to the compounding effect of interest that occurs each year, as well as a bonus when the bond matures.

Interest on locked savings accounts

You’ll see the interest you’ll earn on a locked savings account as an annual equivalent rate (AER), which will help you compare interest rates from accounts with different terms. 

How much you’ll earn from a no access savings account depends on the following:

  1. The term of your account

  2. The amount you deposit

  3. How interest is earned according to the bank

  4. The interest rate (AER)

Do I have to pay tax on a locked savings account?

Thanks to the personal savings allowance, UK taxpayers can earn interest on savings up to certain amounts without paying tax. Basic rate taxpayers can earn up to £1,000 of interest per year, and higher-rate (40%) taxpayers up to £500 of interest per year (additional rate taxpayers are not eligible for an allowance).

Any interest you earn over this amount is usually collected through the PAYE system, or you’ll have to complete a self-assessment tax return.

Is a locked savings account a good investment?

Locked savings accounts could be a good investment as they typically offer higher interest rates than easy access or notice accounts. With these types of savings accounts, you’ll be locking your money in until the end of your chosen term, so you should only open one if you have a lump sum to deposit that you won’t need access to.

Can you lose money with a locked savings account? 

No. When your term ends, you’ll receive your original deposit back with any interest you’ve earned.

The Financial Services Compensation Scheme (FSCS) protects deposits up to £85,000 per person, per banking group under British banking regulations, meaning your money is safe up to that amount. If you want to deposit more than that, it’s a good idea to split your savings between accounts from different banking groups.

Pros and cons of locked savings accounts

Pros of locked savings accounts

  • Guaranteed savings growth
  • Peace of mind thanks to FSCS deposit protection, as long as you bank with a UK registered institution and your savings are less than £85,000 per person, per banking group)
  • Very minimal risk
  • The ability to work out exactly how much you’ll earn
  • Even if interest rates drop, the interest rate on your fixed term bond will stay the same

Cons of locked savings accounts

The interest rate is fixed, meaning that if interest rates rise during your term, you’ll be on the agreed rate until your bond matures, so you might be earning a lower interest rate than the one set by the Bank of England

You won’t have access to your money during your chosen term

You’ll need to pay in a lump sum to open your account - the more you can pay in, the more interest you’ll earn

What are the best locked savings accounts?

Generally, the best locked or no access accounts are those that offer the most competitive rate of interest for the lowest deposit for the period of time that works for you. You can compare different no access savings accounts on our fixed rate bonds page.

How do I find the best no access savings account for me?

The best way to find the no access account that’s right for you is to compare the different accounts available on the market. However, before you do this, it’s important to assess your budget plan and financial circumstances so you know you can afford to lock a lump sum of money away over a set period of time. 

How do I get the best interest rate on a no access account?

There are some things you can look out for when you want to get the best interest rate on your locked savings account, including the following:

1. The longer the term, the higher the interest rate

This might not always be the case, but you’ll typically find that no access accounts with longer terms earn higher rates of interest. Before you open an account, it’s important to ensure you can afford to lock your money away for a longer time period.  

2. No access accounts which offer compound interest are the ones to watch 

Compound interest can help grow your savings at a faster rate because the interest you earn gets added to your overall balance, which is then the basis for earning future interest.

3. A larger deposit could mean a better rate of interest 

Most providers offer more competitive interest rates on larger deposits. You can see how this works for yourself by using an online comparison table.

How to compare locked savings accounts

Once you know how much you can afford to deposit and the term that’s right for you, you can compare different no access accounts. It’s easy enough to do this online by using free comparison tables.

What should I consider when I compare locked savings accounts?

Some of the most important things to consider when you’re comparing these types of accounts include the following:

  • The length of the term

  • The required deposit amount

  • The rate of interest

  • Whether the account offers compound interest 

Why a locked savings account from our marketplace might be right for you

  • They’re free to open

  • Your savings are protected

  • You’ll earn a fixed, competitive interest rate

  • Higher interest rates are available on accounts with longer terms

  • You’ll lock away your savings for a fixed term

  • You can easily manage your savings online

  • The FSCS protects your money up to £85,000 per person, per UK regulated banking group

Log in or register to explore the Raisin marketplace today

How to open a locked savings account

Opening a locked savings account such as a fixed rate bond is easy. Simply register for a free Raisin UK Account in just a few clicks. You can then browse and apply for competitive locked savings accounts from a range of partner banks.

You can find out more about how to apply by reading our guide to opening a fixed rate bond.

Locked savings account FAQs

Is a locked savings account or an ISA better for me?

A locked savings account is a good option if you won’t need access to your money, but want to grow a lump sum. An ISA may be a better option for you if you think you’ll need access to your money or if you want to add to it on a gradual basis, rather than deposit a lump sum.

How do I choose the best locked savings account for me?

A locked savings account might be the right choice for you if you want the reassurance that your savings are safe. The best no access savings account for you will depend on how much you’re looking to earn, how long you’re able to lock your money away for and how much you have to deposit.

Which locked savings accounts have the highest interest rates?

Longer term locked or no access savings accounts, such as 5 year fixed rate bonds, usually offer the highest interest rates, but this is not always the case. It’s worth shopping around and comparing no access accounts from different providers to get the best deal.

Are locked savings accounts my best fixed term savings choice?

Locked savings accounts, or fixed rate bonds, can be a great investment if you’re looking to deposit your money into a savings account, as they typically offer more competitive interest rates than other types of savings accounts, such as easy access or notice accounts.

With locked savings accounts, your money is locked in until your bond matures at the end of the term, so you may only want to consider opening one if you know you won’t need to access your money in the medium to long term.

Can I withdraw money before the end of my term?

You usually won’t be able to withdraw money early, and you’ll likely have to pay a penalty which could negate the interest you’ve earned. Your provider could also penalise you by reducing your interest rate. The penalty will differ depending on your provider, so it’s always best to check before signing up.

Can I top up a locked savings account?

Not usually, as the ‘no access’ stipulation works both ways. The amount you deposit upon opening the account is typically the only time you will pay in.

How do I pay money into my locked savings account?

The only time you’ll typically pay money into your account is when you make your initial deposit. If you’d prefer a type of savings account that allows you to make regular deposits, locked savings accounts may not be suitable for you.

How much money can I open a locked savings account with?

You can open some locked savings accounts for as little as £1, however most accounts require a £1,000 deposit minimum. To earn the most from your money, you’ll probably want to invest as much as you’re comfortably able to.

How many locked savings accounts can I open?

There is no restriction on how many locked savings accounts you can open. There are, however, limitations on each account that you’ll need to adhere to, such as access restrictions and investment criteria. You’ll also need to monitor your income so that it remains below your personal savings allowance, or make a note of how much it goes over by so that you can file it with HMRC.

Will I risk losing my money with a locked savings account?

No – locked access savings accounts are a safe option. The Financial Services Compensation Scheme (FSCS) protects deposits of up to £85,000 per person, per UK regulated banking group under British banking regulations, so your money is safe up to that amount.

If you want to deposit more than £85,000, you might want to spread it between no access accounts from different banking groups.

Are there any alternatives to locked savings accounts?

There are other options available if you want to invest your money for growth, however, they typically carry more risk than a no access savings account. If you’re comfortable with risk, you may want to consider investing.