Can you withdraw money from a fixed-rate bond early?

The provider of a fixed-rate bond reserves the discretionary right to approve or deny an early request to withdraw money before a fixed-rate bond matures. Their support team will often ask for specific supporting evidence to help inform their review of each case, and if an early withdrawal is approved it can incur financial penalties.

How does a fixed-rate bond work?

A fixed-rate bond is a unique type of savings account which offers a consistent interest rate for the trade-off of limited withdrawal access.

First, you select a specific length of time that the fixed term lasts for. These are usually offered anywhere between six months and five years. During this set amount of time, the advertised interest rate tied to the account will remain completely consistent, regardless of changes in the market.

Access to your savings is locked for the duration of the agreed term, meaning they’ll only become free again at ‘bond maturity’ when the term ends.

What happens to access during the fixed term?

A provider will usually provide a brief window, generally two weeks, after your initial deposit during which time you still have the option to withdraw your funds. Once this grace period has passed, the fixed term locks in and both further deposits into the account and any withdrawals from it are unavailable until bond maturity at the end of the agreed term.

In certain cases, a provider will allow for early withdrawals, however these can come with financial fees or interest penalties.

Can you withdraw money from a fixed-rate bond early?

Customers have no inherent right to withdraw their funds from an agreed term early, meaning your provider reserves the right to approve or deny early withdrawal requests on a case-by-case basis.

Generally, these withdrawals are requested in the event of emergency financial changes, such as an involuntary redundancy or significant medical bills, and a provider will usually request supporting evidence with which to review any early withdrawal request.

It’s helpful to note that even if a provider does approve an early withdrawal or account closure, this can incur an interest penalty where all accumulated interest is forfeited, or a financial fee which could eat into the initial deposit.

What should you check before committing?

Before you commit, it can be beneficial to carefully consider your future financial plans to ensure you’ll not need access to your fixed savings before bond maturity. For example, if you’re setting aside this lump sum to earn interest to put towards a major life purchase in two years (such as a housing deposit or new car), then it may be wise to ensure the term you select doesn’t last longer than two years in order to ensure the bond matures at the right time for you.

A practical review checklist

When reviewing whether you can withdraw money from a fixed-rate bond early, consider the following important points:

• Fixed-rate bonds lock away access to your savings for an agreed period, based on your own selection of anywhere between six months and five years.
• Your provider reserves the right to approve any early withdrawal request made before bond maturity, usually requesting specific supporting evidence to inform their review.
• If approved, early withdrawals from fixed-rate bonds can incur financial penalties such as sacrificing any interest earned so far during the term or a fee against the initial deposit.
• As a result, it’s very helpful to carefully consider your future financial plans when selecting a fixed-term length in order to make sure you won’t need access to your funds before the bond matures.

Frequently asked questions

Can you withdraw money from a fixed-rate bond before it matures?

Customers have no inherent right to be able to withdraw funds before bond maturity, meaning you’d have to make a formal request for early withdrawal which your provider would have the discretion to either approve or deny.

What happens if you need to access money in a fixed-rate bond early?

It’s often best to quickly contact your provider’s support team and discuss the situation with them. They may ask for documents or evidence supporting why you want to withdraw funds, so they can review whether the request can be approved.

Are withdrawals allowed during a fixed-rate bond term?

Withdrawals are not generally allowed before bond maturity, however in exceptional circumstances such as unforeseen financial hardship (an involuntary redundancy, medical bills, etc.) a provider reserves the right to approve a pre-maturity withdrawal.

What happens when a fixed-rate bond matures?

Your provider will usually notify you two to four weeks before a fixed-rate bond matures, offering the option to roll it into a new bond. If you do nothing, it will usually be moved automatically into an easy access account, from which you can either withdraw your funds or choose to open another fixed-rate bond.

How long should you fix your savings for?

This depends on your personal financial plans. For example, if you plan to spend these savings on a housing deposit in two years’ time, then it may be beneficial to only fix them for a maximum of two years so they’re ready when you need them. Applying this logic to your future can help you make the right decision.

What should you consider before opening a fixed-rate bond?

Review the interest rate to make sure it’s competitive and carefully consider the length of the fixed term so that you won’t need access to your savings before the bond fully matures. Checking specific account conditions can also be beneficial.

Where can I check the latest rules and product terms?

You can review the latest product rules and terms here.

Next steps

If you’re looking for further information on if you can withdraw money from a fixed-rate bond early, these pages may prove helpful:

View fixed-rate bonds

What to consider before choosing a fixed rate bond?

How to match your savings to your financial goals?

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