Fixed Rate Savings Accounts

A fixed rate savings account gives you a guaranteed interest rate for a set term, so you know exactly how much your savings will grow. These accounts can include fixed rate bonds, which offer a straightforward fixed return, or fixed rate cash ISAs, which can provide tax-free interest. Access to your money can be restricted, or early withdrawals may incur a charge.  

 
Shawbrook offers both fixed rate bonds and fixed rate cash ISAs, providing options to suit different savings goals.

Both fixed rate cash ISAs and fixed rate bonds offer a guaranteed interest rate for a set term, giving savers certainty over their returns. However, there are some key differences:

• Tax treatment: Fixed rate cash ISAs can provide tax advantages as the interest earned on eligible deposits is tax-free. In contrast, the interest earned on fixed rate bonds may be subject to income tax depending on your personal circumstances, including your Personal Savings Allowance. 
• Access to funds: Early withdrawals may be possible with a fixed rate cash ISA but could result in a loss of interest or a charge. Fixed rate bonds generally restrict access until the end of the term.
• Account type: Fixed rate cash ISAs must be opened in individual names due to their tax-free status, whereas fixed rate bonds can generally be opened as individual or joint accounts.

These are some of the main differences, but there may also be other account-specific features, such as maximum balances, that you may want to consider before opening an account.

Choosing a fixed rate savings account depends on your financial goals and how you plan to use your money. Fixed rate bonds may be a good option if you don’t need to make withdrawals and want a straightforward fixed return. Fixed rate cash ISAs may be more suitable if you want tax-free interest, and you may sometimes be able to withdraw from an ISA early, although this could result in a loss of interest or a charge.

You should also consider when you would like access to your funds. Terms can range from shorter options such as nine months or one year, up to longer term commitments such as seven years, although this will vary depending on the product and provider. By matching the type of account and term to your needs, you can find a fixed rate savings account that may work best for you.

There’s no set limit on how many fixed rate savings accounts you can hold, although individual providers may have their own rules. You can hold a fixed rate cash ISA and a fixed rate bond at the same time, which may help you combine tax-free savings with longer-term growth or different access terms.

For fixed rate cash ISAs, you can pay into more than one account within the same tax year, provided your total contributions do not exceed your £20,000 annual ISA allowance. You can also transfer other ISAs without affecting your allowance.  

At Shawbrook, you can hold multiple ISAs in the same tax year, but you cannot spread your annual ISA allowance across more than one account. You can also hold a fixed rate bond at the same time, giving flexibility to manage different savings goals.

In general, fixed rate savings accounts are designed for lump sum deposits rather than regular payments. You usually need to fund the account within a set period after opening, and once the deposit window closes, you cannot add more money to that specific account. Some accounts may also have a maximum deposit amount, so it’s important to check the product terms.

At Shawbrook, once a fixed rate bond is closed for deposits, you cannot add additional funds. Existing savers will continue to earn interest until the bond matures, and you can open a new bond if you want to deposit more money. 

For fixed rate cash ISAs, you can hold up to £250,000 in total. You can deposit up to your annual ISA allowance, which is currently £20,000, and you can also transfer ISAs from previous tax years or from other providers into your Shawbrook Cash ISA without affecting your current year’s ISA allowance. All of this would need to happen within the initial funding window. 

Interest is the money you earn on the savings you deposit. A fixed interest rate means the rate stays the same for a set term, so the amount of interest you earn is guaranteed from the start, provided you meet the account requirements such as maintaining the minimum balance. The rate is set based on market conditions and economic factors at the time you open the account, giving you predictable returns even if market rates change during the term.

No, a fixed interest rate stays the same for the full term of your account. Once your rate is set at the time you open the account, it’s fixed for the duration of the term. This means the amount of interest you’ll earn won’t change, even if market rates rise or fall during that period.

Whether you pay tax on fixed rate savings depends on the type of account you have and your personal circumstances.

• Fixed Rate Bonds: Interest earned on a fixed rate bond may be subject to income tax, depending on your Personal Savings Allowance and overall tax situation.
• Fixed Rate Cash ISAs: Interest earned on eligible deposits within a cash ISA is tax-free. You can pay up to the annual ISA allowance of £20,000 and also transfer ISAs from current or previous tax years without affecting your current year’s allowance.