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Fixed rates rise – but how long should you lock your money away for?
Top one-year savings deals have seen the biggest boost in almost a year
Savers looking for some good news this week are in luck, after top rates on short-term fixed bonds saw their biggest hike in almost a year.
The best one-year account on the market currently offers 4.58% AER, up from the top rate of 4.45% available this time last month.
Average rates have also risen between June and July – the first time in four months.
Should you fix now or hold your nerve and wait to see if rates climb higher? To help you decide, we explain why fixed deals have seen an uptick and reveal the accounts currently offering the best returns.
Biggest rate jump in almost a year
Interest on fixed-rate accounts skyrocketed between April 2021 and October 2023, with the best one-year deal peaking at 6.2% AER. Sadly, they have been steadily dropping since then.
Savers whose one-year term is coming to an end now, and want to reinvest their nest egg in the same type of account, will be disappointed to find top rates are almost one percentage point lower.
However, rates are climbing again. Which? analysis of Moneyfacts data found that, as of 11 July 2025, the best rate for a one-year fixed-term account is 4.58% AER. That's a 0.14 percentage point rise compared to the top one-year deal of 4.44% AER available this time last month.
The latest rise is the biggest jump in top rates for short-term bonds since last August, when interest saw an uptick of 0.15 percentage points month-on-month.
The same can't be said about deals lasting more than 12 months. Our analysis found rates on these accounts haven't budged over the last month, with the top three-year fix slashed from 4.45% AER to 4.42%.
Our table shows the top fixed-term savings accounts, ordered by rate:
| One-year fixed rate | GB Bank | 4.58% | £1,000 | Internet | Monthly, on maturity |
| Two-year fixed rate | GB Bank | 4.43% | £1,000 | Internet | Monthly, yearly |
| Three-year fixed rate | GB Bank | 4.42% | £1,000 | Internet | Monthly, yearly |
| Four-year fixed rate | JN Bank | 4.4% | £100 | Internet | Yearly |
| Five-year fixed rate | Birmingham Bank | 4.47% | £5,000 | Internet | Yearly |
Table notes: rates sourced from Moneyfacts on 14 July 2025.
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What's behind the rise?
The record savings highs we've seen over the past few years are partly a result of the Bank of England raising the base rate 14 times in a row between December 2021 and August 2023. But when the base rate started dropping last August, interest on savings fell with it.
The base rate has remained the same since May 2025, and the market stability that signals has given many providers the confidence to boost rates on some fixed-term accounts.
As Moneyfacts spokesperson Caitlyn Eastell explains: 'Markets tend to be more predictable in the short-term and providers are more enticed to use this as a benchmark to test savers’ appetites and draw in deposits.'
The reason we haven't seen rates improve for longer-term accounts is likely down to more uncertainty about what will happen to the Bank of England's base rate in the future.
In other words, providers don't want to be stuck paying savers nearly 5% interest over the next few years if it looks like the base rate could drop to less than that well before the account matures.
With further base rate cuts expected this year, fixing now could help you secure a better deal than waiting.
And if you're holding out for higher rates, bear in mind that money left in a current account is likely earning little or no interest – and inflation, which hit 3.4% in the 12 months to May 2025, could erode its value over time.
- Find out more: what are the different types of savings account?
How to make the most of fixed-term savings
Switching to a higher-interest deal may be the most important step to ensure your savings are working as hard as possible. But it's not the only thing to consider when choosing a fixed-term savings account.
Fix for longer for best returns
Usually, the general rule of thumb is that the longer you fix, the better the returns. That trend has been turned on its head over the past few years, with shorter-term bonds now paying higher interest.
However, if you don't need your money any time soon, locking in a high rate now is likely to deliver more interest over five years than selecting a new one-year bond each year (assuming there aren't any huge economic shocks during that time).
Consider compounding
Compounding can be a powerful way to grow your savings. It means that, as well as earning interest on your savings, you also earn interest on the interest itself. Therefore, every year that the money is in your account you're earning interest on each previous year's interest.
The key is to re-save both the initial deposit or balance you fixed and the interest earned on it, so you can maximise your earnings.
For example, if you saved £10,000 in an account paying the current top one-year rate of 4.58% AER, over 12 months you would have earned £458 in interest. But if you keep the full amount saved – of deposit plus interest – that could see you earn £479 in interest over the following year.
Keep track with a savings platform
If you're spreading your savings around and opening multiple accounts, then consider signing up to a savings platform.
These websites not only help you source market-leading accounts, but once you're registered, you'll only have one set of login information to remember. And to ensure your savings don't languish in a low-paying account, the platform will usually get in touch to remind you when any bonds are due to mature.
However, the convenience offered by savings platforms comes with a few caveats. Because savings platforms work with a set number of banks and building societies, you could easily miss a top rate offered by a provider not listed on the website.
Also, watch out for fees. While some platforms, such as Aviva Save and Raisin, are free to use, others charge a platform fee for their services. That's often taken as a cut of the interest offered, done before displaying the rates on its site. Others, such as Akoni, take a percentage of your savings; how much varies from one site to another.
Some savings platforms offer cashback for opening fixed-rate accounts with them. Factor this in when comparing rates with other platforms to make sure it's worth it.
- Find out more: how do savings platforms work?
