When it comes to saving your hard-earned money, many of us want the same thing: security, growth, and a bit of peace of mind. Fixed rate bonds – especially Best 1 year fixed rate bonds – have long been a popular option for UK savers looking for a low-risk way to make their money work a little harder.
But with so many options out there, how do you know which 1-year fixed rate bond is the best for you?
In this guide, we’ll break it all down in plain English: what fixed rate bonds are, how they work, the pros and cons, and how to choose the best one based on your needs in 2025 and beyond. We’ll also look at some of the best current offers on the market.
Let’s dive in.
What is a 1 Year Fixed Rate Bond?
A 1-year fixed rate bond is a savings product where you lock away your money for 12 months at a fixed interest rate. In return, the bank or building society guarantees not to change that rate during the year — no matter what happens to the wider economy.
Key features:
- You agree to leave your money untouched for 12 months.
- You get a guaranteed interest rate (no nasty surprises).
- Typically, you can’t access your money early (or you’ll face a penalty).
Think of it like baking a cake: once it’s in the oven, you can’t keep opening the door to check on it — you have to wait patiently for it to be ready!
Why Choose a 1 Year Fixed Rate Bond?
Choosing a 1-year bond can make sense if:
- You want a better rate than you’d get from an easy-access savings account.
- You can afford to lock away some of your money for a short time.
- You prefer a guaranteed return, rather than risking money in stocks or shares.
It’s ideal if you’re saving for something in the near future — like a wedding, holiday, or even building up your emergency fund without the temptation to dip in.
What’s Happening with Rates in 2025?
Since 2022, the Bank of England has raised interest rates to fight inflation, which has been good news for savers. In 2025, while base rates are starting to stabilise, banks are still offering attractive rates on short-term bonds.
A 1-year bond today could fetch you 4.5% to 5.5% AER (Annual Equivalent Rate), depending on the provider — significantly better than the 1-2% we saw just a few years ago!
However, because inflation is cooling, rates might start dipping later this year. Locking in now could make sense if you want to secure today’s higher rates.
Pros and Cons of 1 Year Fixed Rate Bonds
| Pros | Cons |
| Guaranteed returns | Money is tied up for 12 months |
| Higher rates than easy access savings | Early withdrawal penalties or restrictions |
| FSCS protection up to £85,000 | Inflation could erode returns |
| Good for short-term savings goals | Rates could rise during your term |
How Safe Are 1 Year Fixed Rate Bonds?
When choosing a bond, safety is key. Look for banks or building societies covered by the Financial Services Compensation Scheme (FSCS). This means your money (up to £85,000 per person, per institution) is protected if the bank goes bust.
Always check for the FSCS logo or verify a provider via the official FSCS website.
🔎 Top tip: Some banks operate under the same licence. If you have multiple accounts, make sure you’re not accidentally breaching the £85,000 limit across linked banks.
Best 1 Year Fixed Rate Bonds (April 2025)
(Rates can change quickly, but here’s a snapshot of some top offers as of late April 2025.)
| Bank/Provider | Rate (AER) | Minimum Deposit | FSCS Protected? |
| Atom Bank | 5.25% | £500 | ✅ |
| Shawbrook Bank | 5.15% | £1,000 | ✅ |
| Hampshire Trust Bank | 5.10% | £1,000 | ✅ |
| Kent Reliance | 5.05% | £1,000 | ✅ |
| Tesco Bank | 5.00% | £1,000 | ✅ |
Note: Always check the latest rates directly with the bank. Some require you to open and manage the bond online via an app.
Real-World Example: How Much Could You Earn?
Let’s say you deposit £10,000 into a 1-year bond offering 5.25% AER.
- After 12 months, you would earn around £525 interest.
- Your total would be £10,525, assuming interest is paid annually.
It’s not life-changing, but it’s a guaranteed £525 for simply leaving your money untouched — far better than earning 1% (just £100) in a regular savings account!
What to Watch Out For
- Early Access: Most fixed bonds don’t allow early withdrawal. If they do, you might lose 90–180 days’ worth of interest as a penalty.
- Minimum Deposits: Some require at least £500–£1,000 to open.
- Interest Payment: Some bonds pay interest annually, others at maturity.
- Tax: Interest counts towards your Personal Savings Allowance (£1,000 for basic rate taxpayers, £500 for higher-rate taxpayers). Anything above that could be taxed by HMRC.
If you think you might need the money within a year, a notice account or easy-access savings account might be a safer choice.
How to Choose the Best Bond for You
Before picking a 1-year bond, ask yourself:
- Can I afford to lock the money away for 12 months?
- Am I getting the best available rate?
- Is the provider FSCS-protected?
- Do I understand how and when interest is paid?
- Will I stay within my Personal Savings Allowance for tax purposes?
Taking a few minutes to double-check the small print can save you frustration later.
Final Thoughts
A 1-year fixed rate bond can be a smart, low-risk way to earn better returns on your savings — especially while interest rates are still relatively high in 2025.
The key is choosing the right bond based on your financial situation. Remember: it’s not just about chasing the highest rate — it’s about balancing security, flexibility, and your personal goals.
By locking in a good deal now, you could give your savings a meaningful boost without losing sleep over market swings or stock market crashes.
Disclaimer
This article is for informational purposes only and does not constitute financial advice. The information is based on current rates and regulations applicable in the United Kingdom as of April 2025, and is subject to change. Always conduct your own research or seek advice from a qualified financial advisor authorised by the Financial Conduct Authority (FCA) before making any investment or savings decisions. All savings products are subject to eligibility, terms and conditions. Past interest rates and offers are not indicative of future performance.
