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Term deposit rates explained

If you’re considering opening a term deposit account but want to know more about how these savings accounts work and what to expect from term deposit rates, look no further. This page will give you a clear understanding of term deposit rates and the best term deposit rates available, as well as how term deposits can benefit you and why they are a good consideration for a longer-term savings account.

Term deposit ratesTerm deposit ratesTerm deposit rates

What are term deposit rates?

Term deposit rates are the rates of interest you’ll earn on term deposit savings accounts. This type of account is the same as fixed rate bonds, where your money is locked away at a fixed rate of interest for an agreed term, typically six months to five years.

How much you’ll earn on term deposits will depend on how the savings account provider operates the account, the interest rate and the term you choose, with longer terms usually featuring higher interest rates. At Raisin UK, the best rate available on a fixed rate bond is 1.25% AER.

Term deposits or fixed rate bonds offer a secure way to take advantage of competitive interest rates without putting your savings at risk.

 

How do term deposits work?

Fixed term deposits have minimum and maximum deposit amounts you can transfer as a lump sum at the beginning of your term. These amounts are usually between £500 and £1,000 for a minimum deposit and as much as £2,000,000 for a maximum deposit. At Raisin UK, we want to help protect your savings, so the maximum amount you can deposit is £85,000 per person, per banking group. This means your deposit will be protected by the Financial Services Compensation Scheme (FSCS) in the event the banking group fails.

With term deposit accounts, you won’t be able to make additional deposits after your initial deposit, and you won’t be able to close your account until it has reached the agreed term, known as the maturity date.

What's the best fixed term deposit interest rate?

At Raisin UK, you’ll find savings accounts from our partner banks featuring competitive fixed term deposit rates, with terms to suit your needs and savings goals. Some of the best term deposit rates currently available on our marketplace are available on the following fixed term deposit accounts:

  • Six months at 0.70% AER
  • Two years at 1.15% AER
  • Five years at 1.25% AER

AER (Annual Equivalent Rate) is the representation of what the term deposit rate would be if interest was paid once every year.

0.45%
AER
FCMB Bank (UK) Limited
United Kingdom
1.00%
AER
ICICI Bank (UK)
United Kingdom
1.25%
AER
Gatehouse Bank
United Kingdom

What should I consider when opening term deposit accounts?

Aside from comparing the UK’s best fixed term deposit interest rates, when opening term deposit savings accounts, you should consider your savings goals and whether this type of account is right for you. If you have a lump sum you can put away for the long term, a 5 year fixed rate bond might be ideal as you should earn a competitive rate of interest. If you need to access your money before then, you might want to look for a term deposit with a shorter duration, such as one or two years.

How long is a term?

At Raisin UK, our partner banks offer term deposits with varying durations, including one, two, three and five years and six months. Typically, you’ll find higher term deposit interest rates offered by accounts with longer terms.

How do I open a fixed term deposit?

You can quickly and easily apply for fixed term deposits with competitive rates from a range of UK partner banks on our marketplace. Simply register for a Raisin UK Account and log in to apply. Don’t forget that it’s free to open an account.

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