Lloyds fixed bond now pays a year's interest upfront

Lloyds now lets savers take a full year's interest in the first month on its one-year Online Fixed Bond, which pays 4.00% AER fixed. The deposit stays locked for 12 months.

Chandraketu Tripathi

Finance Editor, Kaeltripton

Published 9 Oct 2026

Last reviewed 9 Oct 2026

✓ Fact-checked

✓ Cited by AI assistants

Press release + KT analysisUpdated 9 October 2026

Lloyds has added an Upfront Interest option to its one year Online Fixed Bond, letting savers take all 12 months of interest shortly after the funding window closes. The bond pays 4.00% AER/gross fixed for one year, with a 500 pounds minimum deposit. The money stays fixed for the full term.

TL;DR · LAST REVIEWED Lloyds has added an Upfront Interest option to its one year Online Fixed Bond, letting savers take all 12 months of interest shortly after the funding window closes. The bond pays 4.00% AER/gross fixed for one year, with a 500 pounds minimum deposit. The money stays fixed for the full term.

Lloyds has introduced an Upfront Interest option on its one year Online Fixed Bond.
The bond pays 4.00% AER/gross fixed for one year.
Upfront Interest pays all interest due over the 12 month term shortly after the funding window closes.
The deposit remains fixed for the full term with no withdrawals or early closure.

KEY FACTS

Product: Lloyds one-year Online Fixed Bond with Upfront Interest
Rate: 4.00% AER/gross fixed for one year
Premier customers: Extra 0.20% AER/gross with a Lloyds Premier current account open at least 8 days
When interest is paid: Shortly after the funding window closes, if Upfront Interest is chosen
Minimum deposit: £500
Withdrawals: None until the 12 month term ends

What Lloyds has changed

Lloyds published an announcement on 8 October 2026 setting out a new choice for savers using its one year Online Fixed Bond. Customers can now opt to receive 12 months of interest in the first month, while their savings stay fixed for the full term. The option is called Upfront Interest. It is selected when the one year Online Fixed Bond is opened.

Under Upfront Interest, all the interest due over the 12 month term is paid shortly after the account's funding window closes, rather than when the bond matures. Lloyds says the interest is paid shortly after that window closes, at most 20 days from application, into an account the customer nominates when opening the bond. The bond itself continues to run for the full 12 months.

The change applies to the one year Online Fixed Bond. Lloyds states the information is accurate as at 8 October 2026. The announcement sets out the option as an addition to the existing way the bond pays interest, which is at maturity. Customers who do not want interest paid early can still choose the maturity payment.

The rate: 4.00% fixed for one year

The Online Fixed Bond pays 4.00% AER/gross fixed interest for one year. AER stands for annual equivalent rate, a standard way of showing the interest rate over a year. Gross means the interest before any tax is applied. The rate is fixed for the one year term.

Customers with a Lloyds Premier current account that has been open for at least 8 days get an extra 0.20% AER/gross. That is an addition to the 4.00% rate for eligible Premier current account holders. The extra amount is set out by Lloyds as 0.20% AER/gross.

The minimum deposit is 500 pounds, according to Lloyds' published savings terms. At 4.00%, a deposit of 10,000 pounds earns 400 pounds gross over the year. That figure is the gross interest before any tax is applied. The same 4.00% rate applies to the bond whether the customer chooses Upfront Interest or payment at maturity.

What stays locked

Even though the interest is paid early under Upfront Interest, the savings remain fixed for the full term. Customers cannot withdraw any money until the 12 month term is up. Lloyds' terms state no withdrawals or early closure. The early interest payment does not change the access rules on the deposit.

The bond runs for one year. During that time the money stays in the account. The fact that interest has already been paid does not create a route to take money out. The terms set out by Lloyds apply for the whole 12 month period.

This means a customer choosing Upfront Interest receives the interest shortly after the funding window closes, but the deposit itself is not available until the term ends. The no withdrawals and no early closure conditions apply in the same way as they do for the standard maturity payment option.

How to choose upfront or at maturity

Customers choose Upfront Interest when opening a one year Online Fixed Bond. The choice is made at the point of opening the account. Upfront Interest is available in the Lloyds app and online for existing customers, and new customers can apply online. Existing customers can therefore select the option through those channels when they open the bond.

Customers opening a one year Online Fixed Bond can still choose to have their interest paid when the bond matures. That is the existing arrangement, under which interest is paid at the end of the 12 month term. The new option sits alongside it rather than replacing it.

The decision is therefore between receiving all the interest due over the 12 month term shortly after the funding window closes, or receiving it when the bond matures. Both routes use the same bond and the same 4.00% rate. The choice is made when the account is opened, through the app or online for existing customers.

What Lloyds says about the launch

Lloyds says it is the only UK bank to offer the option of receiving 12 months of interest in the first month on a one year fixed bond while the savings stay fixed for the full term. That claim is attributed to Lloyds. The announcement was published on 8 October 2026.

The claim relates to the combination of early interest payment and the deposit remaining fixed for the full term. Lloyds states the information is accurate as at 8 October 2026. The option is named Upfront Interest and is offered on the one year Online Fixed Bond.

Lloyds sets out the rate as 4.00% AER/gross fixed for one year, with an extra 0.20% AER/gross for customers with a Lloyds Premier current account open for at least 8 days. The minimum deposit is 500 pounds according to Lloyds' published savings terms. At 4.00%, 10,000 pounds earns 400 pounds gross over the year.

Source: Lloyds Bank announcement, 8 October 2026.

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DISCLAIMER

This article is for general information only and is not financial advice. Rates and terms can change; check the provider's current terms before opening any account.

Frequently asked questions

What is Upfront Interest?

Upfront Interest is an option on the Lloyds one year Online Fixed Bond. It pays all the interest due over the 12 month term shortly after the account's funding window closes, rather than when the bond matures.

What rate does the one year Online Fixed Bond pay?

The bond pays 4.00% AER/gross fixed interest for one year. Customers with a Lloyds Premier current account open for at least 8 days get an extra 0.20% AER/gross.

Can money be withdrawn if interest is paid upfront?

No. Customers cannot withdraw any money until the 12 month term is up, and Lloyds' terms state no withdrawals or early closure.

How is Upfront Interest selected?

Customers choose Upfront Interest when opening a one year Online Fixed Bond. It is available in the Lloyds app and online for existing customers, and new customers can apply online.