Fixed or variable rate savings accounts – what’s right for me?
Learn more about the key differences between fixed rate and variable rate savings accounts.
When choosing savings accounts, understanding all your options means you can get it right first time. Fixed and variable rate accounts are two potential options that you could look into, and in this article we’ll try to answer the question of what’s right for you.
What is a fixed-rate savings account?
A fixed-rate savings account allows you to put your money away for a period of time, at a set interest rate, meaning it won’t change. Sometimes you can choose how long you want your money to be in there, or it might be set by your bank.
| Advantages of a fixed-rate savings account | Disadvantages of a fixed-rate savings account |
|---|---|
| Your interest rate is fixed so you can get an idea of how much you might earn. | If interest rates increase, your rate will stay the same for the rest of the period. |
| Interest rates are generally higher than some instant savings accounts. | You might need a minimum amount to put in to open a fixed-rate account. |
| You won’t be able to just ‘dip into’ your savings – so it can reduce your temptation to spend. | If you take money from your savings during the term, you may have to pay a fee. |
| Interest will be paid directly into your account, letting you see all the work your monies doing. |
What is a variable rate savings account?
A variable rate account is a savings account that is set with a variable interest rate, meaning the rate that you open your account with may change in the future. Your bank or building society should let you know in advance if this is going to happen.
| Advantages to variable rate savings accounts | Disadvantages of variable rate savings accounts |
|---|---|
| Some accounts are flexible, so if you can get a better rate elsewhere, or if you need to dip into your savings, you can without penalty. | You may get a lower interest rate than if you had a fixed-rate savings account. |
| There might be a lot more options when it comes to variable rate accounts compared to fixed-rate. | Your interest rate can fluctuate – meaning it can go down as well as up. |
| You won’t be able to work out how much interest you might earn accurately because the interest rate may change. |
Where can I get a fixed or variable rate savings account?
Aviva Save offers a mixture of fixed and variable rate accounts giving you plenty of options.
It has a savings marketplace, a one-stop shop for savings accounts that we’ve found in the market.
If you can’t find what you need with us, check in with your local bank or building society to see what they might be able to offer you.
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