Finance Calc App

Fixed-rate bond calculator

See what a fixed-rate bond will be worth at maturity — the interest earned and the effective annual yield (AER). FSCS-protected savings locked at a fixed rate.

By Mitch Duncan Last reviewed Methodology

Deposit details

Many fixed-rate bond products pay interest at maturity or annually. Choosing more frequent compounding raises the effective yield if interest is added to the balance rather than paid out.

Value at maturity
£10,920.25
Interest earned
£920.25
Breakdown
Deposit
£10,000.00
Nominal rate
4.50%
Effective annual yield (APY)
4.50%
Term
2 years
Your UK fixed-rate bond

Protection: FSCS-protected up to £85,000 per person, per banking licence.

Tax: Interest counts toward your Personal Savings Allowance (£1,000 basic-rate, £500 higher-rate); anything above is taxed at your income-tax rate.

Figures assume the rate is fixed for the whole term and interest is left to compound (unless you pick "at maturity"). Early withdrawal usually forfeits some interest or isn't permitted. This is an estimate, not financial advice.

Want the full picture? Dollar-Cost Averaging Explained →

How a fixed-rate bond works

A fixed-rate bond (also called a fixed-rate savings account) locks your money away with a bank or building society for a set term — commonly 1 to 5 years — at a guaranteed rate. It's not an investment bond; your capital isn't at risk, and savings are FSCS-protected up to £85,000 per person, per banking licence.

Maturity value = deposit × (1 + AER ÷ n)^(n × years)

AER lets you compare fairly

UK providers quote the Annual Equivalent Rate (AER), which standardises for how often interest is paid so you can compare accounts on equal footing. Interest can be paid monthly or annually; if it's added to the bond rather than paid away, it compounds.

Tax and the Personal Savings Allowance

Most savers pay no tax on bond interest thanks to the Personal Savings Allowance — £1,000 of interest tax-free for basic-rate taxpayers, £500 for higher-rate, and nothing for additional-rate. Interest above your allowance is taxed at your income-tax rate. A cash ISA shelters interest from tax entirely. Note that with multi-year bonds, interest may all count in the tax year it's accessible.

Access and rate risk

Fixed-rate bonds usually don't allow withdrawals until maturity. A longer fix guards against falling rates but locks you out if rates climb. Keep an emergency fund in an easy-access account alongside.

What this calculator doesn't cover

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Frequently asked questions

How is a term deposit's maturity value calculated?
Compound the deposit at the fixed rate over the term: maturity = deposit × (1 + rate ÷ n)^(n × years), where n is how often interest compounds per year. If interest is paid out each period instead of added, it's simple interest: deposit × (1 + rate × years). The calculator above does both depending on the compounding option you pick.
What's the difference between the nominal rate and the effective yield?
The nominal rate is the advertised headline rate. The effective annual yield reflects compounding — if interest is added to the balance monthly or quarterly and left there, it earns interest itself, so you end up slightly ahead of the headline rate over a year. If interest is paid out to another account, there's no compounding and the two are equal.
Does compounding frequency change how much I earn?
Only if the interest is left in the deposit to compound. More frequent compounding (monthly vs annually) raises the effective yield a little. But many fixed-term products pay interest out at maturity or to a linked account, in which case the frequency doesn't change your total — you simply receive the simple interest on the principal.
Can I withdraw money before the term ends?
Usually not without a penalty. Most fixed-term deposits either forbid early withdrawal or forfeit a chunk of the interest, and some require notice. Because the money is locked away, keep a separate emergency fund in an easy-access account so you're not forced to break the deposit.
Should I choose a longer or shorter term?
It depends on the rate outlook and when you'll need the money. A longer term protects you if rates fall but locks you out of higher rates if they rise; a shorter term keeps you flexible. Some savers split their cash across several deposits maturing at staggered dates — a 'ladder' — to balance access and return.
Is the interest taxable?
Generally yes — interest is usually treated as taxable income, though the exact rules and any allowances depend on your country and whether the deposit sits inside a tax-sheltered account. The calculator shows the gross maturity value before any tax. Check your local rules or hold the deposit in a tax-advantaged wrapper where available.

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