Fixed Rate Accounts / Bonds
Fixed Rate Accounts / Bonds
Fixed rate accounts, also known as Bonds, are high interest savings accounts (usually the best rates on the market) designed for people who can afford to tie up spare money for a fixed length of time, usually 1 to 5 years.
A fixed rate of interest is offered at the outset until the maturity date, meaning that the interest rate will remain the same no matter what happens to the Bank of England Base Rate (BEBR). By not having a variable rate customers may miss out on increases to interest rates, but can also benefit if the BEBR falls.
Most providers usually state that under the terms of the account the customer may not make any withdrawals before the maturity date, except in the case of the death of the account holder.
Some longer-term accounts need customers take their money out in an emergency or at a certain point in the term, although such withdrawals will normally incur a severe penalty.
Additionally, once a bond has been opened customers are not usually allowed to add to their initial deposit.
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