Fixed Rate Bonds

You may be wondering – what even is a fixed rate bond? Well, the simple answer is that it’s a savings account that gives you a fixed rate of interest that won’t change during the account’s term. You won’t be able to access your money until after the end date (also known as the maturity date). In return, you’ll get an interest rate typically higher than easy access savings accounts.

A fixed rate bond can also be called a savings bond or a Building Society bond.

• Savings bonds require you to deposit a lump sum of money for a fixed term. You can make further deposits into the bond up to and including a specific date.
• Terms on a savings bond can be anywhere from 1-5 years.
• You’ll receive a fixed interest rate on your investment for the term you choose.
• Depending on the account, you’ll need to deposit a minimum of £100 or £1,000 to open a savings bond.
• You can’t access your money while it’s held in the bond.
• When your savings bond reaches the end of its term and matures, you have the option to reinvest your money into a new bond or cash in (withdraw the money) and close the account completely.
• The money you save in a savings bond with us is covered by the Financial Services Compensation Scheme (FSCS). Under the FSCS, up to £85,000 of your savings with us is protected.

• You get a fixed interest rate on your bond for the entire term, so you know exactly what you’ll be getting back when your bond matures.
• Fixed rate bond accounts tend to offer higher interest rates than instant access accounts. Interest rates also tend to go up with the length of term, so the longer you can lock your money away, the better your return will probably be.
• The fixed interest rate and FSCS protection (up to £85,000 per institution per person) mean building society bonds come with minimal risk and a clear picture of your investment.

There are some factors you’ll need to weigh up against these benefits, like losing access to your money for the term of your bond and having to pay in a lump sum. Also, bear in mind that your interest rate is fixed regardless of whether rates go up or down during your term, so you’ll neither benefit nor suffer from any wider fixed bond interest rate changes during the term.

We offer fixed rate bonds ranging from 1-5 years. 

Keep an eye out for our limited issue fixed rate bonds, as these can offer improved interest rates but are only available for a certain amount of time.

Opening a fixed rate saving bond with us

There are three ways you can open a fixed rate bond with Leeds Building Society:

• At your local branch
• Online
• By post

For most of our fixed rate bonds, you can apply online. Click ‘Get Started’ on your chosen account to begin your application right now. If you need any help, you can contact us.

Depending on the account, you’ll need a minimum of £100 or £1,000 to open a fixed rate saving bond with us. Our standard fixed rate savings bonds tend to require a £100 minimum deposit, while our limited issue fixed rate savings bonds can sometimes require a £1,000 minimum investment.

When your savings bond matures, you have several options available to you:

• You can reinvest all the money into a new bond.
• You can add another one-time lump sum deposit to what you’ve earned in your bond and start a new one.
• You can withdraw some of the money and reinvest some of it into a new account.
• You can cash in your bond, withdrawing all the money and closing the account completely.

That decision is up to you and will depend on your financial circumstances when your bond matures.

You can open more than one savings bond if you wish. Likewise, you can hold other types of savings’ accounts at the same time. If you’re going to open multiple bonds, make sure you have enough money accessible outside of your bonds in case of an emergency.

Interest on our fixed rate bonds is paid annually. This is known as compound interest, which means your interest is added to your initial investment every 12 months. This means you earn interest on a growing sum of money throughout the bond term.

If you’re a basic rate (20%) taxpayer in the UK, you get a tax-free Personal Savings Allowance (PSA) on the interest you earn of £1,000. Higher rate (40%) taxpayers get a £500 PSA, while those on the top rate (45%) receive no PSA benefit.

So, depending on your tax bracket and how much interest your bond is earning, you may have to pay tax.