Fixed Rate Savings Accounts are also known as Fixed Rate Bonds. These allow you to put aside a fixed amount of money, for a set amount of time and know exactly how much interest you will make!
You can’t usually take any money out or put any additional money into a Fixed Rate Savings Account. The amount you start with sits there until the end of the fixed term. At the end of the term, interest is popped on top and your money is given back to you…simple stuff.
What Types of Fixed Rate Accounts Do I Need to Know About?
There are 4 types of Fixed Rate Bonds that you need to know about! These are:
- Normal Fixed Rate Accounts – These give you a fixed amount of money (interest) for your savings.
- Tracker Rate Accounts – These give you a fixed rate of money (interest) but in direct relation to the Bank of England base rate. So…if the Bank of England base rate goes down…so does the amount of interest you will make! And vice-versa.
- Short-Term Fixed Rate Accounts – These are savings accounts that are open for a short amount of time, usually between one week & 18 months.
- Long-Term Fixed Rate Account – These are savings accounts that are open for a pretty long time, anywhere between 18 months and 10 years+.
What Should You Be Thinking Account When Choosing a Fixed Term Savings Account?
You’ve probably heard me say this before but…saving is easy, you just have to choose to put some money away. So make that choice!
There are pretty much only 5 things you need to think about when looking to open a Fixed Rate Savings Account:
- How long you’re happy to wait to withdraw your money – You need to think about how impulsive you are and what you’re saving for. Then pick an account with a fixed term period that you feel comfortable with.
- How much you want to save – You can pop open some fixed rate savings accounts with as little as £10, so think about how much you want to save.
- The Interest Rate (How much money you will make) – Take a good look at interest the bank is offering you. You might be able to get a much better deal!
- How often you want to receive your Interest – Most Fixed Savings Accounts give you the choice to be paid the interest you have made either monthly or yearly! Decide which works best for you. Remember that if you get paid monthly, you can quickly re-invest that money to make even more money…boss move!
- Is your money safe & protected? – Only put your money into a savings account that is protected by a compensation scheme. This means that if anything happens to the bank, some or all of your money will be protected. That’s golden, and you won’t see anyone running away with your cash!