Fixed-term savings rates are edging up again, with banks and building societies competing more aggressively for deposits.
After a period where rates had begun to drift down, some providers are now nudging fixed deals higher, particularly for one and two-year terms.
For savers willing to lock money away, that could present an opportunity to secure a guaranteed return.
But fixed accounts are not right for everyone, and timing matters.
Why fixed savings rates are rising
Fixed-term savings rates are influenced by swap rates - a measure of where financial markets expect interest rates to go in future.
In recent weeks, those expectations have shifted upwards, meaning banks can offer better rates on fixed products while still protecting their margins.
At the same time, competition for savers’ deposits remains strong. Many providers rely on customer savings to fund lending, so even small changes in market expectations can translate into improved deals.
Seasonal factors are also playing a role. With the end of the tax year approaching, ISA demand typically increases, prompting providers to sharpen their rates to attract inflows. The result is a modest but noticeable uptick in some fixed-term offers.
When it makes sense to fix your savings
Fixed-term accounts can be a good option if you are confident you will not need access to your money during the period of time.
They offer certainty - you know exactly what interest rate you will receive - which can be appealing at a time when the direction of future interest rates is unclear.
In addition, they are particularly useful for savers who already have an emergency fund in easy-access savings, want to lock in a competitive rate before any potential cuts, or are saving for a specific goal within a set timeframe.
However, fixing is always a trade-off.
The drawbacks to consider
The main downside of fixed-term savings is the lack of flexibility.
There is the risk of getting the timing wrong: while rates have ticked up slightly, they could move higher still, particularly if inflation proves persistent or central banks delay cutting interest rates. If rates continue to rise, you could end up locked into a lower return than newer accounts offer.
And if your circumstances change, accessing your money early can be difficult or come with penalties.
Most accounts either do not allow withdrawals at all or impose interest penalties for early access. That makes them unsuitable for money you might need at short notice.
Longer-term fixes require even more caution. While accounts of three years or more are available, tying money up for that long can limit your options. For some savers, investing may be more appropriate over longer time horizons, depending on their goals and appetite for risk.
Finally, as with all savings, it is important to check that your provider is covered by the Financial Services Compensation Scheme (FSCS), which protects up to £120,000 per person, per institution. ISA allowances are £20,000 per year across all types and accounts combined.
Non-ISA accounts often offer slightly higher headline rates, but ISAs can be more attractive for higher-rate taxpayers who would otherwise pay tax on their savings interest.
Best fixed-term savings accounts right now
Rates change frequently, but the following accounts are among the more competitive currently available across both cash ISAs and standard fixed-term savings accounts. Deals are correct at the time of writing but always check account terms are suited to your needs. Interest rates are all AER for easy comparison and are non-ISA unless stated.
One-year fixed rates
- Close Brothers Savings - 4.44%
- Close Brothers Savings - 4.36% (ISA)
- Atom Bank - 4.35%
- RCI Bank UK - 4.30%
- Vida Savings - 4.37% (ISA)
15-18 month fixed rates
- Paragon Bank - 4.40% (ISA, 15 months)
- Skipton Building Society - 4.20% (ISA, 18 months)
- Aldermore - 4.26% (ISA, 15 months)
Two-year fixed rates
- Close Brothers Savings - 4.50%
- Chetwood Bank - 4.46%
- Close Brothers Savings - 4.45% (ISA)
- RCI Bank UK - 4.45%
Savers should check minimum deposit requirements and whether interest is paid monthly or annually, as this can vary between providers.
Should you fix now?
Whether now is a good time to fix depends largely on your personal circumstances. For those with spare cash they do not expect to need, current rates offer a chance to secure a guaranteed return in an uncertain environment.
For others, keeping some flexibility - or waiting to see how rates move - may be the better option.
As ever with savings, the right approach is rarely all or nothing - even if you split your money, keeping some in easy-access accounts while fixing the rest to balance flexibility with certainty.
When investing, your capital is at risk and you may get back less than invested. Past performance doesn’t guarantee future results.
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