Fixed rate savings accounts can offer some of the highest rates of interest of any of the types of savings accounts.
But you will only benefit from the top rates if you are able to leave your money in the fixed rate savings account for the full fixed period. Any withdrawal before the end of the fixed rate period will normally result in you receiving a much lower rate of interest.
This is why
fixed rate savings accounts are really only suitable if you are certain that you won’t need access to your cash before the end of the time period. If you think that you might need your money out earlier then go for an instant access savings account or a notice savings account instead.
Fixed rate savings accounts are also known as fixed rate bonds. The fixed rate period normally runs from one to five years, though you can find accounts with six month fixed rate periods. Of course, the longer you lock your money away for the better the interest rate you should expect to receive in return.
Obviously in times of falling interest rates
fixed rate savings accounts are an attractive option when rates on other savings accounts are falling. When interest rates generally are rising however fixed rate savings account can become uncompetitive if they get left behind.
It can be a wise move to ensure that you have some money in a variable rate savings account and some money in a fixed rate savings account so that you are in a position to benefit regardless of the direction of interest rates.
