2 year fixed rate bonds

The amount you can earn with a 2 year fixed rate bond depends on the interest rate on the savings account, and how much you can deposit. This table illustrates how much you could grow your initial deposit over a two year term with different savings amounts at different AERs. These figures are based on 2 year bonds paying interest in full on maturity, rather than crediting interest after a year.

*Rates are for illustrative purposes only and are not related to actual savings accounts from the Raisin UK marketplace. 

A 2 year fixed rate bond is a savings account that locks in a fixed interest rate for 24 months. You deposit a single lump sum when opening the account. In exchange for fixing the rate, you can’t access or withdraw your money until the term ends.
You can open a 2 year fixed rate bond with one lump-sum deposit, which you can make with multiple transfers at Raisin UK. Once your savings account is open, you can’t make any further deposits or withdraw your money for 24 months.

It’s a simple way of ensuring you get the results you want from your savings in the medium-term, as you’re locked in for two years. If locking your money away for two years doesn’t sound right for you, fixed rate bonds are also available with six month, one year, three year and five year terms, or you could consider more flexible savings accounts, like easy access and notice accounts. Simply choose the savings account that best suits your goals.

Yes, a 2 year fixed rate bond is the same as a 2 year savings bond. This type of savings account goes by several different names. You may hear a fixed rate bond called a fixed term deposit, fixed rate savings, fixed term savings, savings bonds or a fixed rate savings account.

You open a 2 year fixed rate bond by depositing a single lump sum. Your money earns a set interest rate for exactly 24 months. During this time, you can’t make additional deposits or early withdrawals. Once the term matures, you receive your initial deposit plus all accrued interest.

Most 2 year fixed rate bonds have a minimum deposit amount, typically between £500 and £1,000. There’s also a maximum deposit amount, which for some savings account service providers can go into the low millions. At Raisin UK, the maximum we’ll allow you to deposit is £120,000 per bank to ensure that your deposit has FSCS protection.

It is possible to apply for any number of fixed rate savings accounts, but keep in mind that deposit protection limits apply to the banking group that holds your money, rather than the individual savings account.

2 year fixed rate bonds can be a great short-term investment option if you don’t want to risk investing your money, which could mean you get back less than you put in. Bonds usually offer more competitive interest rates than most other savings accounts, but they do require you to go without access to your cash for 24 months.

Ultimately, the deciding factors when it comes to 2 year fixed term savings accounts are whether you can go without your money for that length of time, and the rate of return.

Comparing term lengths can help you understand how your choice affects your money. Here is a breakdown of how a one year term could compare to a two year term to help you choose the right account.

Yes. At Raisin UK we offer a range of different terms from our trusted partner banks, ranging from six months to five years. Click on the cards below for more information.

• 6 Month Fixed Rate Bonds
• 1 Year Fixed Rate Bonds
• 3 Year Fixed Rate Bonds
• 5 Year Fixed Rate Bonds

If you’re looking for a medium-term savings account and can lock away a lump sum for 24 months, 2 year fixed rate bonds offer the following benefits:

• The interest rate is fixed for two years 

• You know how much interest you’ll earn upfront

• You know exactly how long your term is and you can plan accordingly

• Your money is protected from interest rate changes
  
  

While 2 year fixed rate bonds offer rate stability, they might not suit every savings goal. It is important to weigh the potential drawbacks before you lock your money away:

• You can’t withdraw your deposit or access your money during the 24 month term
• Fixed rate bonds are funded with a single lump sum, so you can’t top up the account once it’s open
• If market interest rates rise during your term, your account will not benefit from those higher rates
• If inflation exceeds your fixed interest rate over the 2 year term, the real purchasing power of your money will decrease
• Unlike an ISA, the interest you earn in a fixed rate bond is taxable if it exceeds your Personal Savings Allowance

Fixing your interest rate gives you 24 months of predictable returns. However, if inflation remains high, the real value of your savings may still erode over time. Fixed rate bonds can often provide higher interest rates than easy access accounts and ISAs, helping you boost your savings over a two-year period, though fixed-rate ISAs may provide better net returns for those exceeding their Personal Savings Allowance. 

The amount of interest you earn with a 2 year fixed rate account is advertised as an annual equivalent rate (AER). How much you can earn depends on the following:

1. How long your fixed rate lasts for, i.e. two years

2. The amount you deposit

3. The annual equivalent rate (AER)

4. How the bank pays interest

If you’re a basic rate (20%) taxpayer, you can earn interest of up to £1,000 per year without paying tax. This amount is reduced to £500 if you pay tax at the higher rate (40%). 

How you earn interest from a 2 year fixed rate bond depends on which bond you open and which bank is offering the account. At Raisin UK, the interest you earn from a fixed rate bond will usually be paid to you upon maturity at the end of your fixed term, regardless of how frequently you earn it. Note that if interest compounds and is paid in full at maturity, the total accrued interest is treated as income in that specific tax year. This may cause you to exceed your Personal Savings Allowance in year two.

You can view how often you’ll earn interest and when it will be paid to you by reading the product summary of any savings account you want to apply for.

To find the best interest rate on 2 year fixed rate bonds, you could refer to any online comparison table or do some research into which institution is offering the best rates at this time. As part of your research, always check for FSCS protection and any minimum deposit requirements. It’s always important to read the fine print before signing up to any financial product.

Raisin UK works with a range of partner banks to offer competitive rates on 2 year fixed rate bonds. The current top rate available on a 2 year fixed rate bond via Raisin UK is 5.30%.

Our marketplace provides a choice of 2 year fixed rate savings accounts from UK banks, all of which are free to open. Read our handy guide to opening a fixed rate bond for more information and learn how to find the best fixed rate bond for you depending on your financial situation, savings goals, timeframe and deposit size.

If you’re looking for a savings account with a little more flexibility, consider exploring easy access or notice accounts from our partner banks.

At Raisin UK, you can apply for and manage savings accounts from a range of partner banks in one place. Simply click to apply and forget about the hassle of filling in a new application form for every savings account you open. Register for a free Raisin UK Account to easily grow your savings.

As you can’t top up a bond, you’ll need to deposit a lump sum  at the beginning. The required deposit amount is usually £1,000 or more, depending on the account you choose. The more money you can afford to lock away, the more interest you’ll earn by the end of your term.

The two year term is one of the most important considerations you’ll have for a fixed term savings account, but don’t forget you’ll also need to think about:

1. The amount you can deposit

2. Deposit deadlines 

3. The frequency with which interest is earned

4. How much of your money is protected

5. Tax implications

Yes, the interest you earn on a 2 year fixed rate bond is taxable if it exceeds your personal savings allowance (PSA). Basic rate (20%) UK taxpayers can earn up to £1,000 in savings interest tax-free each year, while higher rate (40%) taxpayers have a £500 tax-free allowance. However, additional rate (45%) taxpayers don’t receive a PSA, meaning that all of the interest you earn will be subject to tax.

All 2-year fixed rate bonds available via our platform are fully protected by the Financial Services Compensation Scheme (FSCS) up to £120,000 per person, per institution. The scheme offers deposit protection on savings accounts from regulated banks in the UK, including 2 year fixed rate bonds. The FSCS will cover deposits up to the £120,000 limit, including any interest, if your bank fails.

All of the fixed rate savings accounts from UK banks that you can apply for through our marketplace offer FSCS protection. The European Deposit Guarantee Scheme (DGS) covers savings accounts offered by European banks via our platform.

When your 2 year fixed rate bond matures at the end of the term, you have three options. You can withdraw your original deposit and accrued interest, transfer the funds to a different savings account, or reinvest your money into a new bond.

Discuss your options with your provider when your bond is coming to an end and explore the interest rates available to you.

When you reach the end of your term, this means your bond has matured. With a 2 year bond, the bank will usually contact you as you get closer to the maturity date. You’ll be asked what you wish to do with the money, either via a form or by confirming your choice online. If you want to withdraw your original deposit, you’ll typically get the money within a few days.