If you have not done so already why don't you have a flick through the moneysupermarket MONEY (click dark blue top of page) SAVINGS and look at all the options - default easy access at £250 and don't forget 50's and ISAs. Roughly speaking you can get around 6.0% on online easy access accounts and up to about 6.5% on one year bonds. My suggestion is that at their age and with the bond market biased towards one year I wouldn't go longer. Informed guesstimates say that interest rates may well rise another 0.25% in the not too distant future.