Leanne Macardle

Leanne Macardle

Editor
Published: 30/01/2019

At a glance

  • 2-year fixed rate bonds offer a good medium-term savings option.
  • Make sure you can commit your money for the full term.
  • Most 2-year fixed rate bonds won’t let you access your money early.

Things to consider

When thinking about taking out a 2-year fixed rate bond, you should also consider what you think will happen to interest rates:

  • If rates go up you could find that your bond is paying less than the top rates available and to make matters worse, it may be expensive or impossible to move your money before the end of the term to capitalise on better returns.
  • If rates go down, or remain broadly the same, you’ll earn more than if you had kept your money in the best-paying easy access account.

What else do I need to know?

When taking out a fixed rate bond, you are promising the bank or building society that you won't withdraw your cash for a specified period of time – in this instance, it will be for two-years. Most 2-year fixed rate bonds do not allow you access to your money once it’s been deposited until the bond matures. Where access is allowed, a considerable interest penalty will probably have to be paid.

Don’t recognise a fixed rate bond provider?

Many of the best rates available on 2-year fixed rate bonds are offered by smaller, relatively unknown banks. These are often referred to as challenger banks.

Learn more about challenger banks

As all banks and building societies listed by moneyfacts.co.uk must be UK-licensed and part of the Financial Services Compensation Scheme (or an equivalent), you can be safe in the knowledge that the first £85,000 you have saved is protected if the bank or building society were to go bust.

Learn more about depositor protection

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

pink piggy bank

At a glance

  • 2-year fixed rate bonds offer a good medium-term savings option.
  • Make sure you can commit your money for the full term.
  • Most 2-year fixed rate bonds won’t let you access your money early.

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