The best one year and three year fixed rate savings accounts

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If you can afford to leave your money untouched for a year or more, you can earn more in interest than you can from an easy access account. Which are the best one year and three year fixed rate savings accounts?

What is a fixed rate savings account?

A fixed rate savings account pays a fixed rate of interest for a fixed period of time. Typically these accounts last for one, three or five years. You generally can only pay in money when you open the account, or within the first couple of weeks. Also, you generally can’t take money out of a fixed rate savings account until the term is up. However, some accounts may let you take money out of your savings account before the fixed rate period ends in certain circumstances.

SAVVY TIP: Confusingly, fixed rate savings accounts are also called fixed rate bonds.

 

Best one year fixed rate savings accounts

You can earn over 2% interest on a one year fixed rate account, if you pick a best buy. This compares to around 1.3% on an easy access account.

  • Atom Bank pays 2.05% on its one year fixed rate saver. Atom Bank is a mobile-only bank, so you can only apply for and manage the account through its app. You have to pay in a minimum of £50 and the maximum you can save is £100,000. You can pay money in for the first week after you’ve opened the account. You can’t add to the account after that and you can’t take any money out before the year is up. Your savings are covered by the UK’s savings protection scheme, the FSCS, up to a limit of £85,000.

SAVVY TIP: This account isn’t available as a joint account.

  • Gatehouse Bank offers Sharia-compliant savings accounts and it pays an expected profit rate on its one year fixed rate savings account of 2%. You can save between £1,000 and £1 million. You can’t take money out of this account before the term is up except in ‘exceptional circumstances’. Your savings are covered by the UK’s savings protection scheme, the FSCS, up to a limit of £85,000 (or £170,000 for a joint account).

SAVVY TIP: Gatehouse Bank used to market savings under the Milestone Savings name and the website you’re taken to is a Milestone Savings one. However, Gatehouse Bank and Milestone Savings are essentially the same company.

You can find out how Sharia savings accounts work in my article How do Sharia savings accounts work 

  • Bank of London and the Middle East pays an expected profit rate of 1.95%. Interest is paid at the end of the year. The minimum amount you can deposit is £25,000 and the maximum is £2 million. You have to apply for the account online but you can’t manage it online. You’ll be sent a statement once a year, together with a certificate that shows you how much interest you’ve earned. Your savings are covered by the UK’s savings protection scheme, the FSCS, up to a limit of £85,000(or £170,000 for a joint account).

SAVVY TIP: You can only get early access to your money if you or the joint account holder dies or is diagnosed with a terminal illness.

  • Oaknorth Bank pays 1.87% on its one year fixed term deposit account. You have to manage the account online. The minimum amount you can save is £1,000 and the maximum is £250,000. You can only make one deposit payment, so whatever you want to save in this account has to be paid in at the same time. Your savings are covered by the UK’s savings protection scheme, the FSCS, up to a limit of £85,000 (or £170,000 for a joint account).

SAVVY TIP: If you register for online banking, you can manage the account online. Otherwise, you can write to, email or phone the bank if you need to contact them.

Three year savings accounts

As you’d expect, you can earn a higher rate of interest with a three year savings account. As I write this, the top rate is 2.33%.

  • Gatehouse Bank pays an expected profit on its Sharia-compliant three year fixed rate savings account of 2.33%. You can save between £1,000 and £1 million. You can’t take money out of this account before the term is up except in ‘exceptional circumstances’. As I mentioned before, your savings are protected up to £85,000.

SAVVY TIP: Gatehouse Bank used to market savings under the Milestone Savings name and the website you’re taken to is a Milestone Savings one. However, Gatehouse Bank and Milestone Savings are the same company.

  • RCI Bank three year fixed term savings account pays 2.31% interest. The minimum amount you can save is £1,000 and the maximum is £1 million. Unlike many fixed rate savings accounts, you can top up your RCI Bank savings at any time during the first 30 days after you open the account. Interest can be paid monthly or annually. The account has to be opened and operated online.

SAVVY TIP: Be aware that RCI Bank is not covered by the Financial Services Compensation Scheme. Instead, any savings you have are covered by the French deposit protection scheme up to a limit of €100,000.

  • Atom Bank pays 2.3% on its three year fixed rate saver. Atom Bank is a mobile-only bank, so you can only apply for and manage the account through Atom Bank’s app. You have to pay in a minimum of £50 and the maximum you can save is £100,000. You can pay money in for the first week after you’ve opened the account. You can’t add to the account after that and you can’t take any money out before the term is up. As I mentioned before, your savings are protected up to £85,000.

SAVVY TIP: This account isn’t available as a joint account.

  • Shawbrook Bank pays 2.3% interest on its three year fixed rate savings account. You can pay in between £5,000 and £2 million. You can apply for the account online and manage it online, by phone or email. Interest is paid once a year. Your savings are covered by the UK’s savings protection scheme, the FSCS, up to a limit of £85,000 (or £170,000 for a joint account).

How I found the best buys

I’ve looked at Savings Champion and Moneyfacts to find out which accounts are the best buys.

Related articles:

Tax-free savings allowance explained; interest of up to £1,000 a year tax free

10 things you need to know about making a savings claim to the Financial Services Compensation Scheme.

Five savings apps; apps to help you get into the savings habit

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