A fixed rate bond might not be for everyone – potential downsides include:

  • No access to your savings for the fixed term: you won’t be able to take any money out of the savings account over the fixed term and you won’t be able to close the account early
  • No further deposits: you usually have 30 days from opening your account to deposit your funds and you won’t be able to add money after that. This means fixed rate bonds are a good option for those who have a lump sum to invest, but not for regular savers
  • Interest rate changes: interest rates are currently at historic lows (in June 2020, the bank of England base rate is just 0.10%), so the return on a long (four or five year) fixed rate bond may become uncompetitive during the term. That said, fixed rate savings often offer the best returns in a low interest rate environment.

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