Fixed-Rate Savings Calculator
A fixed-rate savings bond typically pays a better rate than an easy-access account, in exchange for one specific condition: your money is locked away for the agreed term, usually one, two or five years, with no access until it matures. This calculator works out exactly what that fixed rate produces over your chosen term, including how tax on the interest actually applies, since that part of the calculation catches more people out than the interest rate itself.
Fixed Deposit / Term Deposit Calculator
Calculate exactly how much you'll earn from a fixed-rate savings account or term deposit. Compare AER rates to find the best deal.
The Trade You’re Actually Making
The higher rate on a fixed bond compared with an easy-access account is compensation for giving up flexibility — the bank can rely on that money staying put for the full term, which lets it offer a better rate than an account you could withdraw from at any time. This only makes sense if you are genuinely confident you will not need the money before the term ends; a fixed bond is not the right home for funds that might be needed for an emergency, since the whole benefit depends on the money staying locked away as agreed.
A sensible practical approach many people follow is to keep a separate, genuinely accessible emergency fund entirely outside any fixed bond, and only commit money to a fixed term that is clearly surplus to any foreseeable near-term need — that way the higher rate is captured without risking needing to break the fixed term for an emergency it was never meant to cover.
Why a Multi-Year Bond Can Push You Over Your Tax-Free Allowance in One Go
This is a genuinely underappreciated quirk of fixed-term savings: interest on a bond is generally taxed in the year it is credited to your account, not spread evenly across the years it was actually earned. A two-year bond that pays all its accumulated interest at maturity can land the full two years’ worth of interest in a single tax year — potentially pushing you over your Personal Savings Allowance in that one year, even though spreading the same total interest evenly across two separate tax years might have kept you comfortably under it both times. This calculator accounts for this by applying the allowance to the full interest figure as it would actually be taxed, not an averaged annual amount.
Choosing a bond that pays interest annually rather than only at maturity can sometimes avoid this specific issue, since it spreads the taxable event across multiple tax years naturally — worth considering specifically for larger deposits where the total interest is more likely to meaningfully exceed the Personal Savings Allowance in a single year.
Seeing the PSA Timing Issue in Practice
£20,000 in a two-year fixed bond at 4.5%, paying interest only at maturity, produces total interest of roughly £1,840 landing entirely in one tax year — comfortably above the £1,000 Personal Savings Allowance for a basic-rate taxpayer, triggering tax on the excess. The same £20,000 at the same rate, but in a bond paying interest annually instead, produces roughly £900 in year one and a similar amount in year two — both comfortably under the £1,000 allowance in each separate year, resulting in no tax at all on the same total return. Identical amount, identical rate, a genuinely different tax outcome purely because of when the interest is credited.
What Happens If You Need the Money Early
Most fixed bonds simply do not allow early access at all — not even with a penalty, in many cases — which is a stricter restriction than people sometimes expect coming from other savings products. A small number of providers offer bonds with an early access option subject to a penalty, typically a loss of a set number of days’ or months’ interest, but this should be treated as the exception rather than assumed to be available. Before committing funds to a fixed bond, it is worth being genuinely confident the money will not be needed for any reason before the maturity date.
The ISA Comparison Worth Making First
Before locking money into a taxable fixed bond, it is worth checking whether a fixed-rate cash ISA offering a similar rate is available, since a cash ISA shelters all the interest from tax entirely, regardless of how much is earned or when it is credited — sidestepping the Personal Savings Allowance timing issue altogether. This only applies within your annual £20,000 ISA allowance, so for larger sums beyond that limit, a standard fixed bond alongside an ISA is often the practical combination. Our ISA Growth Calculator models the tax-free version of this same calculation. If locking money away for a fixed term does not suit your situation, our Savings Interest Calculator covers easy-access accounts where your money stays fully available throughout.
Frequently Asked Questions
Is my money protected if the bank fails during the fixed term?
Yes, up to the standard £85,000 per person per authorised institution under the Financial Services Compensation Scheme, the same protection that applies to easy-access savings.
Can I add more money to a fixed bond after opening it?
Generally no — most fixed bonds are opened with a single lump sum and do not accept further deposits during the term, unlike some regular savings accounts designed specifically for ongoing monthly contributions.
What happens automatically when the bond matures?
This varies by provider — some automatically roll the funds into a new fixed term at the prevailing rate unless you instruct otherwise, while others transfer the balance to an easy-access account. Checking your specific provider’s maturity process in advance avoids an unwanted automatic rollover.
Is a longer fixed term always a better rate?
Not necessarily — the relationship between term length and rate depends on the current interest rate environment and expectations for future rates, so a five-year bond is not automatically priced better than a one-year bond at any given time.
Does interest compound within a fixed bond?
This depends on the specific product — some pay interest annually, which can then itself earn further interest if left in the account, while others pay interest only once at maturity. This calculator lets you select the payment frequency to reflect your specific bond.
Should I split money across several shorter bonds instead of one long one?
Some savers use a “laddering” approach, splitting funds across bonds of different maturity dates, so a portion of the money becomes accessible at regular intervals rather than all being locked until one single date. This can offer a useful middle ground between full flexibility and the higher rate of a longer, single fixed term.
Important Information
This calculator provides an estimate for general information purposes only and does not constitute financial advice. Actual rates, terms and tax treatment depend on your specific provider and circumstances, and tax rules may change. For advice specific to your situation, consult a qualified financial adviser. See our Disclaimer for further information.