Fixed rate bonds can be a great option for a higher return on your savings if you’re prepared to lock your money away for a set period.
The good news is that your money can also make a positive impact on the planet and society while it’s earning interest for you.
What are fixed rate bonds?
Also known as fixed rate savings, these accounts pay interest at fixed rates for a set term, usually ranging from six months to five years. Typically the longer the term of the bond, the higher the interest rate will be. You can get some of the best rates on the market in return for not being able to access your money until your term ends.
Who are fixed rate bonds best for?
Unlike ordinary savings accounts, most bonds don’t let you add money little by little; you need to deposit all the money you want to save when you open the account (usually within 14 days).
Therefore they’re a good option if you already have a lump sum of money that you want to grow for a few years, perhaps to buy a car or holiday. If you are looking to lock your money away for longer, you would get potentially higher returns by investing it.
Here are our picks for the highest-paying ethical fixed rate bond accounts:
1. Tandem Bank
- One year Fixed Saver Account – 5.12 per cent interest gross/AER
- 18 months Fixed Saver Account – 4.80 per cent interest gross/AER
- Two year Fixed Saver Account – 4.40 per cent interest gross/AER
- Three year Fixed Saver Account – 4.10 per cent interest gross/AER
Why is it ethical?
Digital challenger bank Tandem aims to be a “greener, more accessible bank for people across the UK”. It guarantees that your savings are never used to fund fossil fuel extraction and production or similar destructive industries. Instead, money held in its savings accounts is used solely to fund its lending products.
Tandem’s home improvement loans finance energy-efficient improvements such as solar panels and air source heat pumps, saving people money on energy bills while also helping to save the planet. Tandem’s EPC mortgages reward customers who own energy-efficient homes.
Your savings are covered up to a total of £85,000 by the FSCS.
Key terms: Save anything from £1 to £2.5 million. No early access to your savings is allowed.
Find out more about Tandem Bank in our full review
2. Nationwide
- One year Fixed Rate Online Bond – 4.50 per cent interest gross/AER
Why is it ethical?
Building societies such as Nationwide must hold at least 75 per cent of its assets in residential property. This makes it far less likely than its big bank competitors to be lending to unsustainable firms. Its profits are also invested back into the business for the benefit of borrowers and savers (it’s “members”) rather than shareholders.
Your savings are covered up to a total of £85,000 by the Financial Services Compensation Scheme (FSCS).
Key terms: You can open the account with a minimum of £1 up to a maximum of £5 million. No early access to your money is allowed.
3. Coventry Building Society
- Fixed Bond (344) until 31st August, 2026 – 4.35 per cent interest gross/AER
Why is it ethical?
As “mutual” organisations, building societies are owned by their customers and not shareholders.
This is important because it means they behave differently – better. Shareholder-owned companies tend to aim for maximum profits as quickly as possible, which can result in some less-than-ethical decision-making, whereas building societies’ interests are the same as their customers’ interests. Therefore, good products and service are as important as profits (and these go back to members anyway).
Your savings are covered up to a total of £85,000 by the FSCS.
Key terms: Deposit £1 to £250,000. No early access to savings allowed. The term ends on 31st August, 2025.
Top 7 ethical current accounts
6. Gatehouse Bank
- One Year Woodland Saver at 4.90 per cent expected profit
- Three Year Woodland Saver at 4.52 per cent expected profit
Why is it ethical?
As an Islamic Bank, Gatehouse does not invest in industries considered unethical under Shariah principles, which in practice are the same as those frowned upon under Christianity. On its website, it says “Gatehouse Bank only invest funds in ethical goods and services and, for example, does not invest in gambling, alcohol, tobacco or arms”. It invests in real estate and construction as well as sukuk, which are sometimes known as Islamic Bonds. With the Woodland Saver accounts, Gatehouse plants trees (including oak, hazel and birch) on behalf of its customers.
Key terms: Minimum deposit is £500. No early access to your savings is allowed.
What does “expected profit” mean?
The accounts pay profit not interest because the payment and receipt of interest is forbidden in Islam as money cannot in itself generate money. Instead the company provides an ‘expected profit rate’. If the company feels that the expected profit rate will not be achieved, it will give reasonable advanced notice of the new expected profit rate and customers can close the account immediately with no penalty and will be given the profit they have earned.
4. Charity Bank
- Ethical One Year Fixed Rate Account – 4.51 per cent interest gross/AER
- Ethical Three Year Fixed Rate Account – 4.06 per cent interest gross/AER
Why is it ethical?
With Charity Bank, your savings help to create lasting social change in UK communities. Charity Bank was founded to support charities with loans that they couldn’t find elsewhere and to show people how their savings could be invested ethically and in ways that would make them happy. It invests its customers’ money into charities and social enterprises around the country.
Your savings are covered up to a total of £85,000 by the FSCS.
Key terms: There is a minimum deposit of £5,000 and maximum of £500,000. No early withdrawals are allowed
5. Triodos Bank
- Triodos One Year Ethical Savings Bond – 4.25 per cent interest gross/AER
- Triodos Two Year Ethical Savings Bond – 4 per cent interest gross/AER
Why is it ethical?
Triodos, a Good With Money ‘Good Egg’ firm, will only lend its savers’ money to organisations making a positive impact on social, cultural or environmental issues. You can see the impact you’re making as Triodos publishes details on its website of every project it finances and every organisation it lends to.
Your savings are covered up to a total of £85,000 by the FSCS.
Key terms: The minimum opening deposit is £500. No early closure or withdrawals are allowed.
Find out why Triodos Bank is a Good Egg
