Bonds or Term Accounts

Bonds or Term accounts are high interest savings accounts offering the most competitive interest rates and require you to tie your money up for a specific period of time, usually 1 to 5 years.

Once a bond has been opened you are not usually allowed to add to your initial deposit. Most Providers do not permit any type of withdrawal before the bond matures and the interest rate on most term accounts is fixed from opening the account until the maturity date.

Advantages

• Usually pay a higher rate of interest than the other types of account

Disadvantages

• As the rate of interest paid on the bond is fixed for the duration of the bond, if the Bank of England base rate rises dramatically over the duration of the bond the interest rate paid on the bond will not rise to reflect this.
• You can not usually access your money for the duration of the bond
• You can not add to your initial deposit.