A fixed rate account can be a great choice for your savings, giving you a clear return on your cash. Here’s a deep dive into why you might choose a fixed rate, and the key things to keep in mind:

The benefits of a fixed rate

If you have a lump sum of money that you don’t need to access for a while, locking it into a fixed rate could offer some stability and potential growth.

1. A stable return – this is usually the biggest draw as when you lock into a fixed rate, you secure that interest rate for the entire term (e.g., 1 Year). There’s two key benefits with this.

  • You know your earnings: you can calculate exactly how much interest you will receive when the term ends.
  • Protection against rate drops: If the Bank of England base rate or general market rates drop (or increase) during your term your rate remains stable. You’ll keep earning the competitive rate you signed up for.

2. Encourages saving discipline – if you’re tempted to dip into your savings for non-essentials, a fixed rate can be your best friend. The fact that you can’t withdraw the money once it’s locked away acts as a built-in safety net against unnecessary spending. You know the cash is safe and growing until the maturity date.

3. Ideal for mid-term goals – a fixed rate is perfect for money earmarked for a goal 1–5 years away, such as a large house deposit, a wedding, or a specific travel fund. You secure the money you need, lock in the returns, and ensure it’s ready when you need it without worrying about market movements.

Key things to keep in mind before you commit

The certainty of a fixed rate comes with important restrictions. Before opening an account, make sure you are comfortable with these crucial points:

1. No access during the term – once your money is deposited you can’t make withdrawals. Make sure you already have a readily accessible emergency fund (usually 3–6 months of expenses) sitting in an easy access account (like a Cash ISA or Simple Saver) before you lock any money into a fixed rate.

2. Restricted deposits – fixed rates are designed for lump-sum saving. You are only able to add money during a short funding window when you open the account. Once this window closes, you won’t be able to top up your savings, even if you find extra cash later on. 

3. Rising rates – while a fixed rate protects you from rates falling, it also means your rate won’t increase if interest rates across the market suddenly rise. If rates were to jump significantly after you’ve opened your account, you might miss out on a higher return available elsewhere.

So, is a fixed rate right for you?

A fixed rate is a brilliant choice for disciplined savers who have a clear timeline for a savings goal and want to maximise their return with complete certainty.

It’s not the account for money you might need next month or for your rainy-day fund.

If you’re ready to lock in a great rate and watch your savings pot grow steadily towards a future goal, then a Moneybox Fixed Rate could be the perfect tool for you!

Deposits made to a 1 Year Fixed Rate cannot be withdrawn until the end of the fixed term. There is no ‘cooling off’ period.