Savings bonds explained

Savings bonds are a form of investment that could help your money grow – with generally lower risk than other investment products. They can be used to try to build your savings if you can afford to tie up your money for a specific period of time.

The term of a savings bond can last between six months and five years. During this time, you’ll earn a fixed rate of interest. You can’t normally access or withdraw the money until your term is up

What are savings bonds and how do they work?

A savings bond is a form of fixed-term investment. This means that, unlike flexible-access savings, your money is locked away for an agreed amount of time. Typically, the longer you commit to leaving your savings untouched, the higher your interest rate will be.

During this set period, you cannot access the cash in your bond, but you will earn a fixed amount of interest. If you do need to access it many providers will charge penalties for early withdrawals.

Because savings bonds have a fixed interest rate, you’ll usually know how much you’ll get once your fixed period is up. This can be useful if you have a goal in mind for your savings and can help you plan towards a specific financial objective.

Who are savings bonds for?

Savings bonds can be used by anyone with the capital to invest. Savings bonds might suit you, if you:

Possess a pot of savings that you can afford to lock away for a set period.
Have a definite savings goal and want to know you’ll be able to reach it.
Want to receive a potentially higher return than a regular savings account.

Choosing savings bonds

There are two main types of savings bonds – fixed-rate savings bonds and tracker bonds.

The right one for you will usually depend on your circumstances, what you want to gain from your savings and how much you’re looking to invest.

Withdrawing from a savings bond

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