A look at some of the top paying savings accounts

If you want to earn more interest by locking up your savings, take a look at these top fixed rate accounts

Updated: 
the best fixed rate savings accounts

When it comes to savings accounts, many of us prefer the option of an easy access account so we don't have to worry should we need to get our hands on our cash in an emergency.

However, you'll generally get a better rate of interest if you're prepared to lock away your money for a year or more in a fixed rate bond. A fixed term bond is just like an ordinary savings account, except you can't touch your money for a set period of time.

Interest rates on shorter-term bonds are slowly increasing and easily beat the top easy access accounts.

And with the Bank of England indicating that interest rates are likely to stay low for the foreseeable future, if you don't like the riskier options then there's definitely an argument for locking your money away in a fixed-rate account, at least for the short term.

All of the bonds listed below are with providers who participate in the Financial Services Compensation Scheme, which guarantees the first £85,000 of your savings should the provider go bust.

One-year and 18-month bonds
AccountTermInterest rate (AER)Minimum depositAccess
Castle Trust One-Year Fortress Bond^One year2.25%£1,000Online
Bank of Baroda Fixed Deposit (one-year)One year2.00%£500Online
Islamic Bank of Britain 18-Month Fixed Term Deposit*18 months2.00%£1,000Online, branch, post, phone
Islamic Bank of Britain 12-Month Fixed Term Deposit*One year1.90%£1,000Online, branch, post, phone
Chelsea BS Fixed Rate Bond18 months1.90%£1,000Online, branch
Barnsley BS Fixed Rate Bond18 months1.90%£1,000Online, branch
Yorkshire BS Fixed Rate Bond18 months1.90%£1,000Online, branch
Norwich & Peterborough BS Fixed Rate Bond18 months1.90%£1,000Online, branch
FirstSave Fixed Rate Bond18 months1.90%£1,000Online
FirstSave Fixed Rate BondOne year1.85%£1,000Online
Bank of Cyprus 18-Month UK Bond (Loyalty Rate)18 months1.85%£1,000Online, branch, post, phone
Post Office Growth Bond Issue 23One year1.80%£500Online, branch, post, phone
Bank of Cyprus 18-Month UK Bond18 months1.80%£1,000Online, branch, post, phone
Shawbrook Bank Fixed Rate Bond18 months1.80%£5,000Online, post
Paragon Bank One-Year Fixed Rate BondOne year1.75%£1,000Online
Shawbrook Bank Fixed Rate BondOne year1.75%£1,000Online, post
Aldermore Fixed Rate Savings AccountOne year1.75%£1,000Online, post, phone
Kent Reliance BS Fixed Rate Bond Issue 27One-year1.75%£1,000Online, post, branch


*Anticipated profit rate

^Lower level of FSCS protection

You'll notice some of the accounts offer an anticipated profit rate. This is because they are run according to Sharia law, which forbids the payment of interest.

Two-year bonds

You can get better rates by locking your cash up for longer in a two-year bond.
AccountInterest rate (AER)Minimum depositAccess
Castle Trust Two Year Fortress Bond^2.75%£1,000Online
Islamic Bank of Britain Fixed Term Deposit*2.30%£1,000Online, branch, post, phone
State Bank of India Fixed Term Deposit2.25%£10,000Online
Bank of Baroda Fixed Deposit2.25%£500Online
Shawbrook Bank Fixed Rate Bond2.25%£5,000Online, post
Kent Reliance Two-Year Fixed Rate Bond Issue 272.20%£1,000Online, post, branch
GE Capital Direct Two Year Bond2.20%£1,000Online
Aldermore Bank Fixed Rate Savings Account2.15%£1,000Online, post, phone
Paragon Bank Two-Year Fixed Rate Bond2.10%£1,000Online
Post Office Growth Bond Issue 232.05%£500Online, phone, post
ICICI Bank HiSAVE Fixed Rate Account2.05%£1,000Online

Anticipated profit rate

^Lower level of FSCS protection

Three-year bonds

Now let's now take a look at how the three-year bonds are shaping up.
AccountInterest rate (AER)Minimum depositAccount access
Bank of Baroda Fixed Deposit2.50%£500Online
Shawbrook Bank Three-Year Fixed Rate Bond2.50%£5,000Online, post
State Bank of India Fixed Term Deposit2.50%£10,000Online
ICICI Bank HiSAVE Fixed Rate Account2.40%£1,000Online, phone
Bank of London and the Middle East Premier Deposit Account*2.40%£25,000Online
Chelsea BS Fixed Rate E-Bond2.40%£1,000Online, branch
Barnsley BS Fixed Rate Online Bond2.40%£1,000Online, branch
Yorkshire Building Society Fixed Rate Bond2.40%£1,000Online, branch
Norwich & Peterborough BS Fixed Rate Bond2.40%£1,000Online, branch
Aldermore Fixed Rate Savings Account2.35%£1,000Online, post, phone
Axis Bank Fixed Deposit2.35%£10,000Online
United Trust Bank Three-Year Bond2.30%£500Online, post
Tesco Bank Fixed Rate Saver2.30%£2,000Online, phone
Sainsbury's Bank Fixed Rate Saver2.25%£5,000Online
Investec Three-Year Fixed Term Deposit2.25%£25,000Online, post
Post Office Growth Bond Issue 232.20%£500Online, phone, post
Vanquis Bank High Yield Bond2.20%£1,000Online

*Anticipated profit rate

Four- and five-year bonds

These longer term bonds are more risky. As the term of the account is at least four years, there's a bigger chance that market interest rates could move against you. In other words a five-year account paying 3.10% may look attractive now, but you might be a bit fed up if rates went up and the top instant access accounts were paying 4% in 2016.

With that warning out of the way, here are the top-paying bonds over four and five years.
AccountTermInterest rate (AER)Minimum depositAccount access
Castle Trust Five Year Fortress Bond^Five years4%£1,000Online
Secure Trust Bank Fixed Rate Bond Five-Year Term (Series 13)Five years3.01%£1,000Phone, post
Aldermore Bank Five Year Fixed Rate AccountFive years3.00%£1,000Online, post, phone
Shawbrook Bank Five-Year Fixed Rate BondFive years3.00%£5,000Online, post
FirstSave Fixed Rate BondFive years2.95%£1,000Online
Bank of Baroda Fixed DepositFive years2.90%£500Online
State Bank of India Fixed Rate DepositsFive years2.90%£10,000Online
Shawbrook Bank Fixed Term DepositFour years2.85%£5,000Online, post
Vanquis Bank High Yield BondFive years2.80%£1,000Online
Tesco Bank Fixed Rate SaverFive years2.80%£2,000Online, phone

^Lower level of FSCS protection

Longer-term bonds

If you want even greater returns you could lock your money in for seven years with First Save or SecureTrust Bank, which are both offering a 3.25% return.

While you might end up on an uncompetitive rate in the next few years, at least you'll have had some money coming in over the short term.

Decisions, decisions

Ultimately, deciding how long to tie up your funds is up to you. As we mentioned at the top, you need to weigh up whether the rate of interest you'll be earning is worth locking away your funds for several years.

You should also bear in mind that in the majority of cases, you won't be able to make additional deposits once you've opened your fixed-rate bond – so again, this may put you off tying up your funds for too long. As always, make sure you read the terms and conditions carefully.

Finally, don't forget about tax-free savings. You can also lock away your money in a fixed rate Cash ISA (or opt for an easy access Cash ISA if you prefer) and you won't have to pay tax on any interest you earn.

You could earn much more by lending your money via peer-to-peer websites, which cut out the middlemen – the banks and building societies.

And if you don't have too much money to save, several current accounts offer a better rate of interest than even the top-paying fixed rate bonds. For a full round-up of the best rates on a host of cash savings options, take a look at Where to earn most interest on your cash.

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