Fixed Rate Accounts

Fixed rate accounts, invested in 'bonds', guarantee a certain interest rate for a given period of time because the interest rate offered is not affected by fluctuations in the Bank of England's base-rate (see Interest Rates). Common guaranteed periods of interest range from three months to five years and within this time no withdrawals are allowed. The money can be accessed only when the account matures (the guaranteed period comes to an end). If withdrawals are allowed, they are usually subject to large penalties, such as the loss of interest earned or even account closure. Often, the initial investment is the only deposit allowed in the account and therefore, this type of account is not recommended for those who wish to save small amounts regularly. For more information on regular savings accounts see Regular Savings Accounts.