Video - Fixed or Variable Savings
Fixed or Variable rate savings accounts
Savings accounts come with a rate of interest that is either variable or fixed.
A variable rate can go up or down. The 2 main types of variable rates are tracker and administered. A tracker rate is linked to an index, for example the Bank of England Base Rate, and may change according to this, which means they can be hard to predict. An administered rate means your bank or building society can decide to change the rate. How often the rate changes is up to them, but they’ll usually let you know if they are changing the rate.
Variable rate savings accounts usually have more flexible access to them and are a great option for first-time savers. However, if you’re saving for something specific, lower interest means it may take you longer. Usually the more access available, the lower the interest rate is likely to be.
Alternatively, if you can leave your savings untouched, a good option might be a fixed rate account. These lock your savings away for a set period – usually between one and five years.
They can reward you with a higher rate of interest so your savings could grow faster. And, because the interest rate is fixed, you’ll know how much you could earn on your savings. However, fixed rates usually carry some restrictions on access, so ensure you check the terms and conditions of the savings account you choose to make sure it suits your needs.
This video is intended as guidance only and does not constitute financial or legal advice given by Leeds Building Society.
Fixed rate products are linked to market rates at the time of issue. Future fixed rate products may be offered at higher or lower rates depending upon the changes in market conditions.