Savings Fixed rate means that the account holder knows the exact amount of rate of return they will be receiving on their investment for a certain time period. Such an offer also has a type of savings option which is quite appreciated by those savers who tend to avoid taking risks since the investor is well aware as to what rate of interest will attract their savings. This feature protects the savers from getting affected from the base rate of the bank.
Savings fixed rate
Considering this option is very important when the base rate is high. Presently the base rate is 0.5 percent and this rate is prevailing for the past 5 years so this factor cannot be rendered to be very important when opening Savings Fixed rate account. A major drawback of this account is that the account holder is unable to withdraw money from their savings account when they need it. If there occurs an increase within the base rate, the rate of interest will not rise however, it would increase if the investment is made in variable rate savings account.
Another important factor to understand is that the higher fixed term rate you agree upon, the greater you have exposed your investment to risk the chance of getting a much better deal later sometime. Most of the Savings Fixed rate account has the rule that once your money is deposited, you cannot withdraw it before the deal ends. On the other side, another factor is that the longer term period you are fixing your money at a low base rate, the higher rate of interest will be offered.
Rate of interest
Savings Fixed rate deposits tend to restrict the amount of minimum monthly deposits spread throughout the fixed period. Not adhering to this amount might result in interest rate penalties which also lasts the agreement along with making limited or no access to the funds. For this to prevent, checking the account is important especially when there is a bonus rate which ends every ear. If this feature is present within your fixed rate savings plan, then you should make a comparison of other accounts provider and switch to the best possible option available. However, most of the fixed deals are offering the same rate within the duration of the agreed terms of savings.
In case you feel that at some point, before the maturity period, you might have the need to withdraw your money invested, then Savings Fixed rate account might not be suitable for you. These accounts are best for those investors who can lock their money for a longer time period. Also these accounts are quite attractive to lenders since it helps them in planning their strategies as they know about the amount they have and for what length of time. In case you want to know what the rate of interest will be associated with your money, then the Savings Fixed rate account is definitely your best option.