Interest rates on savings are not fantastic at the moment. To get the best rates of interest, you need to agree to put your money away for several years.
These accounts are called fixed rate savings bonds. To find out which providers offer the best service, see the Fairer Finance tables.
The highest rated providers in our tables who hold ribbons are more likely to give you a good customer experience.
How do I open a fixed rate savings account?
This type of account is available from most banks and building societies. You might need to prove your identity in a branch, but it shouldn’t be too much trouble.
What are the rates like?
The rates are better than easy-access savings accounts. But to be honest, they’re not fantastic.
An account offering a rate of slightly over 2% would be a market-leading contender. And to get that kind of deal you’d have to put your money away for five years.
These accounts can last for anywhere up to ten years, though those that last longer than five years are rare.
What if I need my money at short notice?
If you have locked your money away in this type of account, you are still often able to make withdrawals. However, your provider will penalise you for this with loss of interest, so it’s not a great move.
Some providers will not let you withdraw money until the account reaches the end of its lifespan. So you need to be completely sure that you won’t need it until the end of the term.
Is my money safe?
Your money should be protected by the Financial Services Compensation Scheme (FSCS). This protects up to £85,000 per individual account, or £170,000 for joint accounts.
You can check if your savings will be protected with a particular provider on the FSCS’ website.
If a bank collapses, the scheme will compensate customers up to the £85,000 limit. So you won’t lose money as a result of something that isn’t your fault.
To find out more about the FSCS, read our guide about how it works.
The personal savings allowance
Since April 2016, basic rate taxpayers have been able to earn up to £1,000 in interest from their savings accounts before having to pay any tax, thanks to the personal savings allowance. This allowance falls to £500 for higher rate taxpayers.