Everything you need to know about Fixed Term Savings Accounts


A Fixed Term Savings Account is a type of savings account where the account holder, or holders, agrees to keep their money deposited in the account for a set period of time, usually ranging from one month to several years.

Almost like a piggybank you deposit money into, that matures over time, and you cannot reach your fingers inside to take any money out as during the period of the fixed term, the account holder cannot withdraw their money without incurring a penalty, or at all in some cases.

If you are looking to save your money, know exactly how much your money will have matured by the end of the fixed term period, and help yourself budget a little bit better – a Fixed Term Savings Account is an option you could consider.

At JN Bank UK, we have put together this guide on everything you need to know about Fixed Term Savings Accounts, the benefits, the drawbacks, and what you should consider before applying for one.


 Written by Harvey Perry
JN Bank UK Digital Marketing Executive

What is a Fixed Term Savings Account?

Compared to an Easy Access Savings Account, the interest rate on a Fixed Term Savings Account is usually higher than that of a traditional savings account, as the bank can use those money for a longer period of time. The interest earned on the account can be paid at different times depending on the Bank and the Fixed Term product, but this is usually paid monthly, annually, or at the end of the term into the account through regular payments or in one lump sum. These money are then typically used by Banks and financial institutions to increase their ability to open more Borrowing applications to other customers.

It’s important to understand that when a customer deposits their money into a Fixed Term Savings Account, or any Savings Account, their money are protected by the FSCS (Financial Services Compensation Scheme). 

This means that your money are protected up to the amount of £85,000. Whenever you see a regulated Bank or financial institution, you should also see the FSCS logo on their website, brochures, and on their application portals. You can see an example of what it will look like below, and you will see their logo again at the bottom of this article because we provide our own Fixed Term savings accounts, but we'll tell you more about that later!


Fixed Term or Easy Access Savings Accounts?

Someone might choose a Fixed Term Savings Account over an Easy Access Savings Account for several reasons:

Higher Interest Rates

A major reason why someone would open a Fixed Term Savings Account is because you can often earn higher interest rates, as the bank can invest the money for a longer period of time. A higher interest rate on a savings account means that the bank is paying a higher rate of interest on the money you have deposited in the account. This results in a higher interest rates on the money saved because the higher interest rate allows the savings to grow at a faster pace, increasing the overall value of the savings over time.  

For example, if you have £10,000 in a savings account with an interest rate of 1% per year, you will earn £100 in interest over the course of that year. In this cost-of-living crisis that we are in, if you are in a position to open a Fixed Term Savings Account, they can also help offset the effects of inflation, as it increases the buying power of your savings over time through the interest you have earned, which makes it extremely important that you understand what interest rate you are agreeing to when opening the account.

Reaching Savings Goals

Fixed term savings accounts can also help you to reach a specific savings goal by having your money locked away for the duration of the Fixed Term period. Having a savings goal is important for creating a sense of financial security and can help you prepare for unexpected expenses, such as job redundancies, medical emergencies, or even as a nest egg you're setting aside to grow into something you can later rely on in a couple of years time.

Monitoring Progress

Having a Fixed Term savings account allows  you to track your progress and see how much closer you are to reaching your financial goals, which can be a source of satisfaction and encouragement. It's important to choose a realistic savings goal when considering opening a Fixed Term Savings Account as this will help determine how long you want to lock away your money, and how much interest you will have earned by the time your money matures (the account term finishes).

Better Budgeting 

Fixed term Savings accounts can also help with budgeting by providing you with a clear end date for when your money will be released and made available to you again. Being able to budget better and actually having a budget that you stick to regularly, is a great way to understand your spending habits and where your money are going, which can be eye-opening and help you make better financial decisions. A budget can also help you plan for future expenses, such as your summer and winter holidays, home repairs you have planned to take care of this year, or car purchases, and ensure that you have the money available when you need them. It's important to regularly review and adjust your budget as needed to reflect changes in your financial situation and spending habits.

Overall, having a budget is an effective way to take control of your finances, manage your spending, and achieve your goal of getting financially fit for 2023!

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What are the benefits of using a Fixed Term Savings Account?
  • Fixed term accounts often offer higher interest rates compared to easy access accounts. 
  • They removed temptation of being able to deposit money into your savings account, only to take withdraw it a few weeks later to treat yourself to something. If you are able to set enough money aside to open a fixed term savings account and can comfortably live without that money until the end of the fixed term period, then you can take this money and set it aside.
  • FSCS Protected: Deposits made to a FSCS (Financial Services Compensation Scheme) recognised bank are protected up to the amount of £85k, meaning if the Bank was ever to cease trading, your money up to this amount would be protected and insured. This means £85,000 per eligible person, and per bank, and up to £170,000 for eligible joint accounts.
What are the downsides of using a Fixed Term Savings Account?
  • The main drawback of a Fixed Term Savings Account is that your money is locked away for a set period of time and early withdrawal may result in penalties or reduced interest. There may come a time weeks into opening the account when you actually needed that money.
  • If interest rates rise while your money is locked into the fixed term period, you may miss out on higher interest rates by being locked in at the rate you agreed to when you opened the account. There is no real way to avoid this as interest rates change frequently, so all you can do is complete as much research as possible to get the best rate at that time.
  • The interest earned on a Fixed Term Savings Account may not keep pace with inflation, reducing the buying power of your savings over time.
What else should I consider before opening a Fixed Term Savings Account?

Carefully review the terms and conditions of the account, including the deposit requirements, and penalties for early withdrawal if there are any. You should be able to find Product Details and Terms and Conditions on your chosen Banks website. Also consider whether you might need to access your savings before the end of the term. If you do, you may want to consider an account with a shorter term or one that allows early withdrawal with a reduced interest rate.

Be aware of any penalties for early withdrawal, and make sure you understand how they would affect your savings. Also, understand if you are able to withdraw your money at all as some banks will not allow you to withdraw your money until the maturity period has ended. Having a plan for your matured savings is always good to have going in opening one. Will you move your money into another savings account or use them for a specific purpose? Provided you give your bank an answer for what you intend to do with the money you have nested away, you can either move your money into another Fixed Term Savings Account at the new, updated interest rate or withdraw your money to use them for the purpose you saved for in the first place!





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3 Great Reasons to Save with JN Bank UK

Your savings are protected by the Financial Services Compensation Scheme


The money you save with JN Bank UK is protected up to £85,000 per person by the Financial Services Compensation Scheme (FSCS). All the money you save with us, whether in one or multiple accounts is counted towards this limit. You should also note, that if you have any other JN Bank UK accounts opened through a savings platform then these deposits also count towards the total limit of £85,000.

Access to your money when you need it or lock it away and get a better rate


Our easy access account can be opened with just £1 and gives you access to your money when you need it. We are working on new rates for our Fixed Term Deposit Savings Accounts. These will have terms of between 1 to 5 years.

Quick to open an account online with the reassurance of a highly rated customer services team


It is straight forward to apply for a savings account with JN Bank UK – you can do it all online. If you do need some help, then our customer services team is there to help. We’re highly rated on Trustpilot and were finalists for the British Bank Award’s Customer Services Champion in 2022. 

We offer an easy access account or fixed term savings account

Over terms of 1 to 5 years. Follow the "CLICK HERE" button to visit our savings page.