Detailed Guide on Fixed Rate Savings Account in the UK

If you are an Indian working in the UK and want to earn high interest on your surplus funds, a fixed rate account from an Indian bank can be a smart choice. Read this post to know what it is, how it works, and how much interest you can earn from such accounts.

The UK is a popular choice among Indians looking for a professional opportunity abroad. Once you move to the UK and start working, you'll mostly send funds to your family back home regularly. But after sending funds to India and managing your expenses in the UK, if you are left with a considerable amount every month, the same can be kept in a fixed rate account.

This will allow you to earn handsome interest on your idle funds with complete flexibility to withdraw the amount if required. Let us have a look at some important things that one should know about fixed-rate accounts in the UK-

1. What are Fixed Rate Accounts?

Fixed-rate accounts in the UK are similar to what we know as term deposit accounts in India. They are basically Fixed Deposit (FD), or Recurring Deposit (RD) accounts that allow the depositor to earn a fixed rate of interest when the funds are kept in the account for a period.

There are now Indian banks having branches in the UK offering this facility. Seamless fund transfer between UK/Indian accounts, high interest earning, and internet and phone banking facilities are some other features of such accounts.

2. How Much is the Interest You Can Earn?

The interest depends on the bank you select. Most of the top Indian banks in the UK generally offer around 2.25% AER on RD and around 1.80% AER on FD. AER is nothing but Annual Equivalent Rate or the interest that your investment will earn in a year after compounding.

Most Indians in the UK generally prefer fixed-rate RD and deposit a fixed amount in such accounts on a monthly basis throughout the selected deposit tenure.

3. What is the Minimum Deposit Amount and Duration?

You can open a fixed rate account in an Indian bank in the UK with as little as £1,000. If you select RD, you can deposit £1,000 in the fixed-rate account on a monthly basis and withdraw all of it along with the interest income at the end of the tenure.

Moreover, if you are left with a higher amount in a particular month, you are also free to deposit more and earn higher interest. The minimum duration for such accounts is generally 1 year.

4. Can I Withdraw the Funds Before the Tenure?

Yes, you are allowed to withdraw your deposit amount even before maturity. However, this generally involves paying a premature withdrawal penalty. Also, the interest calculation will then be done only on the basis of the duration for which you actually invested.

While you should try to avoid making a premature withdrawal, you can make use of this facility in case of an emergency.

5. How to Open Fixed Rate Account?

In most cases, you will be required to open a savings account in the bank in which you’d like to open a fixed rate account. If you already have a bank account, you will be required to submit an application form for opening a fixed rate account.

Additional documents like ID proof and address proof might also be required. Some of the Indian banks in the UK also allow account opening online or through the phone.

Get Guaranteed Returns on Your UK Income

If you are an Indian working in the UK, a fixed rate account can be an excellent option for earning zero-risk returns on your idle funds. Look for a top Indian bank in the UK offering this facility so that your hard-earned money grows and helps you get closer to your financial objectives.