How to Choose the Best Fixed Rate Savings Account in the UK?

Looking for the best fixed-rate savings bank account in the UK? Check out this post to know the factors that can help you make the right decision.

Fixed-rate bank accounts are a smart way to grow your savings within a short tenure in the UK. With tenures ranging from 6 months to 5 years, the accounts are highly flexible for a host of short-term financial objectives. Moreover, as the interest rate is fixed, you don’t have to worry about any market-linked risks or losses.

But as many banks now offer various fixed-rate accounts, how will you choose the best? Here are a few factors that can help you make the right decision-

  1. Interest Rate

Needless to say, the biggest incentive of considering a fixed rate account for your investment is the guaranteed interest rate. But the rates can vary significantly between banks and the different types of fixed-rate accounts they offer. Moreover, the rates can also vary as per the tenure you select for your account.

For instance, some of the top banks in the UK offer as much as 0.50% AER for a 1-year tenure. So, ensure that you thoroughly compare the rates of different banks and the products they offer to select one that best matches your requirements.

  1. Interest Payout Frequency

Some of the banks also allow you to choose the interest payout frequency between monthly and annually. The interest is generally calculated on the daily closing balance and then deposited into the account as per the frequency you select.

If you want your investment to earn a regular income, then you can go with the monthly option. Select annual payout if you are more comfortable with receiving the interest income at longer intervals.

  1. Minimum Deposit Amount

You should also check the minimum deposit amount required for the fixed-rate account, as this can also vary between banks. With some banks, the minimum deposit is as low as £1,000. It is always better to go with a reputed bank with a low minimum deposit.

This provides more flexibility with regard to selecting the investment amount and also ensures that more people can take advantage of the account.

  1. Individual and Joint Account Options

It is also possible that you might want to open your fixed-rate account jointly with your spouse or family member. But not every bank in the UK offers the joint holding option with their fixed rate accounts.

Make sure that you confirm with the bank whether they offer only individual accounts or the option to choose between individual and joint holding.

  1. Account Opening Process

Many of the banks now allow customers to apply for a fixed-rate savings account online or even through phone banking. Alternatively, you can always visit the bank and apply for the account offline.

You can find detailed information about the account opening process on the official website of your bank. Ensure that the process is simple and does not include a lot of documentation.

Earn Guaranteed Returns with a Fixed Rate Savings Account

The fixed-rate accounts are ideal for anyone who is not comfortable with the high level of risk that most investment options in the UK generally offer. If you are looking to earn risk-free guaranteed returns, then a fixed rate account can be an excellent choice.

Make a note of these factors to compare top banks and their offerings to select one that best matches your requirements.

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