Q. I recently opened a fixed-rate savings bond with Harrods Bank. When I realised that it was due to be acquired by another provider (Tandem Bank), I decided to cancel the agreement. I didn't think this would be a problem as I'd only opened the account a few days before. However, I was told that cancellation wouldn't be possible. Is this correct?
A. Taking out a fixed-rate bond requires you to lock away your money for a set period of time. Some - but not all - providers offer an 'out' in the form of a cooling-off period or early exit fee.
Which? explains whether providers are required to allow you to cancel and whether you'll be charged a fee.
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Under laws introduced in 2004, many financial products come with a cooling-off period if you buy them at a distance - meaning online or over the phone.
Under these regulations, you must have 14 days from the date of purchase to cancel without incurring a penalty (and 30 days for pensions and life insurance).
Cash Isas, including fixed-rate products, fall into this category - the provider must let you cancel within 14 days.
But these rules don't apply to applications for a fixed-rate savings account or bond, meaning you don't have a 'right to cancel.' Generally, once you've made your first deposit, your provider can hold you to their terms and conditions.
Once you've deposited your money into a fixed-term product, you may not be able to withdraw it until the term ends.
This applies to both savings bonds and fixed-rate Isas.
In some cases, providers may allow you to exit your fixed-rate bond early, but this is at their discretion - you'll need to check the terms and conditions before you open the account.
If you are allowed an early exit, you'll need to pay a penalty fee and may also have to repay any interest you've earned. These fees should be set out in the information you receive before you open the account.
We reviewed the highest-rate two-year savings bonds, and none of the top five allowed early withdrawal before the term expired.
| Product | Interest rate | Early withdrawal allowed? | Minimum deposit | Maximum deposit |
| Atom Bank 2 year Fixed Saver | 2.1% | No | £50 | £100,000 |
| Union Bank of India 2 year Fixed Rate Deposit | 2.05% | No | £1,000 | £1m |
| Axis Bank UK Ltd 2 Year Fixed Term Deposit | 2.04% | No | £1,000 | £200,000 |
| OakNorth Bank 24 Month Fixed Term Deposit | 2.02% | No | £1,000 | £250,000 |
| The Access Bank UK Sensible Savings 2 Year Fixed Rate Bond | 2.02% | No | £5,000 | £500,000 |
For fixed-rate Isas, savers have a little more flexibility, with four of the five highest-rate providers allowing early withdrawals - but the penalties can be steep.
If you haven't earned enough interest to cover the penalty charge, you may get back less money than you put in.
Carefully weigh up your options before deciding to make an early exit: while you might earn more interest elsewhere, the penalty charges may mean you're worse off overall.
| Product | Interest rate | Early withdrawal allowed? | Minimum deposit | Maximum deposit |
| Al Rayan Bank 24 Month Fixed Term Deposit Cash Isa | 1.7% | No | £1,000 | N/A |
| Virgin Money 2 Year Fixed Rate Cash E-Isa Issue 306 | 1.66% | Yes, but charged90 days' loss of interest on the amount withdrawn | £1 | £2m |
| Virgin Money 2 Year Fixed Rate Cash Isa Issue 340 | 1.66% | Yes, but charged90 days' loss of interest on the amount withdrawn | £1 | £2m |
| Aldermore 2 Year Fixed Rate Cash Isa | 1.65% | Yes, but charged180 days' interest | £1,000 | N/A |
| Post Office Online 2 Year Fixed Rate Isa Issue 11 | 1.6% | Yes, butBreakage Charge equal to 180 days' loss of interest | £500 | N/A |
Source: Which? Money Compare two-year fixed-rate Isas
Fixing your rate for a prolonged period can be appealing, especially if you're concerned that interest rates may drop in future.
But before you commit to locking away your cash, think carefully about your finances, both now and in the future.
Questions to ask yourself include:
Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.
