Fixed rate savings (Bonds)

The term is the length of time you commit to locking away your savings, as well as the length of time you have a guaranteed fixed interest rate.

Maturity refers to your account reaching the end of your chosen term. This is when you can choose to access your savings or move them to another account.

Annual Equivalent Rate (AER) illustrates what the interest rate would be if paid and compounded each year. For our Fixed Rate Saver, interest is paid directly into a separate account of your choice and is therefore not compounded.

Gross is the interest rate paid before tax is deducted.

Like our other savings accounts, funds in fixed rate accounts may be protected by the Financial Services Compensation Scheme (FSCS). This scheme is an independent body and it’s free to consumers.

Your eligible deposits held by Barclays Bank UK PLC, trading as Tesco Bank, are protected up to a total of £85,000 per person if the bank goes out of business. This limit is applied to the total of any deposits you have with the following: Barclays, Barclays Business Banking, Barclays Premier Banking, Barclays Wealth Management and Tesco Bank.

A fixed rate account could suit you if you can afford to lock away a sum of money over a set time period and don’t need the flexibility of being able to access your funds until the end of your fixed term.

ISA stands for ‘Individual Savings Account’.

When you save in an ISA, the interest you earn is tax-free - meaning you don’t have to pay income tax on it. The tax rules set by HM Revenue & Customs are subject to change, and the value of tax benefits depends on your individual circumstances.

There is a limit to how much you can save in an ISA within each tax year. For the current tax year, the ISA limit is £20,000.

This is the total amount you can save across all the ISA accounts you may hold combined - not per account.

You won’t always have to pay tax on the interest you earn in a regular Savings Account, it depends if the amount of interest you earn exceeds your Personal Savings Allowance.

When you earn interest from a savings account that isn’t an ISA, it will count towards your Personal Savings Allowance.

This doesn’t mean you’ll pay income tax on the interest you earn (most people can earn some interest from their savings without paying tax, source: HMRC “Tax on Savings Interest” 16/09/2024) but it could if the amount of interest you earn goes beyond your Personal Savings Allowance.

The Personal Savings Allowance depends on what rate of income tax you pay:

If you’ve been saving in an ISA, the interest you earn won’t contribute to your Personal Savings Allowance. You can learn more about how ISAs work.

Tesco Bank won’t deduct tax from the interest you earn. The tax rules set by HM Revenue & Customs are subject to change, and the value of tax benefits depends on your individual circumstances.

Like most fixed rate accounts, ours don’t allow withdrawals until the account reaches the end of its term (maturity).

You can only access funds in your Fixed Rate Saver due to exceptional circumstances where the account will be closed with no charge. However, if you need access to funds in your Fixed Rate Cash ISA the account must be closed or transferred to another provider and will incur charges.

This will depend on the type of fixed rate account you have.

With our Fixed Rate Saver accounts you will have maturity options, whereas our Fixed Rate Cash ISA automatically becomes an Instant Access Cash ISA, unless you tell us otherwise.