Whether you are saving specifically for a new car, a dream holiday, or the financial security of your children, a Fixed Term savings account can be a great way to gain good rates of interest and stop you from dipping into the money you are trying to put away for the future. These accounts do have various stipulations and requirements, depending on the individual bank or building society, and as such are certainly not suitable for everyone. In order to be sure you have selected the right account for you, it is best to use our comparison table below to evaluate the options available, weigh up the terms of each account, and work out how well they suit your personal and financial needs before committing yourself.
The interest rate you receive will depend on many factors, including which financial institution you select, how much you wish to invest, and over what period you choose to save. Generally, the greater the period of time and the larger the amount you can commit to saving, the higher the rate of interest you will receive. Beware that some providers have a minimum deposit amount to qualify for their highest rates and in most cases there are penalties for taking your money out short of the length of time agreed, if indeed this is allowed at all.
Fixed Term savings accounts are great for ensuring you don't spend money that you are trying to save, as in most cases, these accounts restrict you from taking money out without penalty, a waiting period or both. If you are likely to require quick access to your funds, or you are not in a position to be saving a large sum of money right now, then a Fixed Term savings account is probably not for you.
With a Fixed Term Savings Account, the interest rate is generally higher than other types of standard savings accounts and the rate is fixed, therefore, regardless of any economic changes which could cause a fluctuation in the interest rate, you can calculate exactly how much interest you are earning on your money each year. Unlike some other accounts that move with the Bank of England rates, your fixed interest will not change over the course of your agreement, which would work favourably were interest rates to decrease. However, this will obviously mean that an increase will leave you disadvantaged, which is why it is wise to review your account and the current rate being offered on the market.
Remember, you shouldn't be fearful of switching savings accounts in order to hunt down the best offer, just do make sure that you read all of the small print (terms and conditions) to ensure that you aren't entering into a penalty-heavy deal, and to guarantee that the rates or bonuses you are switching for aren't only for a short period, or you may be left with a lesser rate after an introductory period.