Whether you are saving specifically for a new car, that dream holiday or putting money away for your kids, a Fixed Term savings account can be a great way to gain good rates of interest and stop you from dipping into money you are trying to put away for the future. These accounts so, however, have various stipulations and requirements which are provided by each individual bank or building society and are certainly not suitable for everyone. In order to be sure you have selected the right account for you, it’s best to use our comparison table below to evaluate the options available, the terms of each account and how well that suits your needs before you commit to this product.
The interest rate you will receive will depend on which bank or building society you select. Their rate will generally depend on the amount you wish to deposit into the account to save and the length of the agreed period that the money will be saved for. This time frame varies provider to provider and will ultimately decide the rate of interest you receive. 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. In most cases there are also penalties for taking your money out short of the length of time agree.
In some cases you may be unable to access your money early whatsoever. For this reason, you should consider your saving options, be aware of all the terms & conditions of the account, and be certain that a Fixed Term savings account adequately meets your needs.
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. They offer a higher rate of interest than other types of savings accounts or current accounts and given the fixed term, it enables you to calculate how much interest you are earning on your money each year (providing you don't require access to the money sooner).
If you're likely to require quick access to your funds, or you're 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.
Also, given that the interest rate is fixed, you receive the agreed rate regardless of any economic changes that may occur causing a fluctuation in interest rates. Unlike some other accounts that move with the Bank of England rates, your fixed interest should 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.
You should do this every six months or so to ensure you are still receiving a good deal. Remember, you shouldn't be fearful of switching account in order to hunt down the best offer, but make sure 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 might be left with a lesser rate after an introductory period.