Fixed Term Accounts

Fixed term bonds - fixed rate bonds differ from traditional savings accounts. For starters, they are more of an investment. Most people associate an investment as a form of play, things do not always go as planned then it is possible to lose an investment.

However, fixed-rate investments are very safe, as long as you stick to banks registered with the Financial Services Authority (FSA) and make sure you do not invest more than £ 50,000 in any circumstances to ensure that you are fully covered if your bank were to collapse. For a list of banks that are covered by the Financial Services Compensation Scheme see our list of banks by the institution .

Contrary to a current account that has many activities with deposits and withdrawals continued, Fixed Term Bond is usually allow you to make a single payment, then leave the account to let your money grow with interest. Then, when the term ends you have recovered your money with interest added.

Bond accounts have a fixed term - which is the period of time you agree to lock your money, and a fixed rate - which is the agreed rate at which your money will grow. Some fixed term accounts will not allow you to withdraw your money until the end of the term, but others either charge you for the privileged, or reduce the interest rate for the month that the withdrawal was made . These accounts are sometimes called fixed-rate bonds, but they both mean the same thing.

Another difference with fixed term accounts is that the speed at which is agreed at account opening filling not vary based on the rate of the Bank. For example, if you open an account that pays 8% for a period of 1 year, during the 6 months following the Bank of England lowered its rate to 4%, you'll still have 8% until the term expires.

This may also turn against you, because rates could rise, which makes your rates seem less attractive relative to accounts with rates of transmission.

One thing to consider is how quickly you get over the time period you want to block your money. Some accounts offer higher rates for shorter periods, others vice versa. It may also depend on the state of the economy, and forecasts on which the average rate will go. One might think that by locking your money away for a long amount of time you would have found the highest levels, but this is not always the case so compare the rates of savings accounts against the standard.

Eventually accounts and bonds are ideal for those who prefer not to take risks. They offer a guaranteed return and you can expect to get interest rates more attractive than you use other savings accounts.