• How much can I deposit? – There is usually a minimum commitment for depositing money into a fixed rate bond – usually around £500 or more, but this will depend on the fixed rate bond provider. This makes fixed bonds unsuitable for those who wish to top up a savings account in small amounts or through regular saving.
  • How do I get my money back? – With a fixed term these types of savings bonds have a maturity date at which time you will be contacted by your savings provider and provided with options on how you wish your money to be returned to you – you may be given options of putting the money into a new bond from the same provider but usually on maturity you will need to decide on what to do with the money.
  • If you leave the funds where they are the bond provider will normally move the funds into a low or zero interest paying account, so it is in your interests to be proactive.
  • Are their access restrictions to my money?With a fixed rate bond you are usually restricted on access to your money during the specified term. Some fixed rate bond terms will not allow you access at all – while others may provide access on certain terms e.g. one withdrawal a year.  It is important to check the small print before signing up.
  • What is the tax treatment? – Interest paid on your savings is treated as income and you may have to pay tax on it depending on your personal circumstances. If you don’t pay tax you can receive interest gross if you complete HMRC tax form R85. Some accounts will pay interest gross and it is up to you to declare any tax owed to the Inland Revenue. Some bonds allow you to have the interest paid on maturity while others pay monthly or annually.
  • What protection do I have? – Fixed rate bonds are cash deposit based and so you will get back your original deposit plus interest unless the bond provider (normally a bank or building society) finds itself in financial difficulty. In the unlikely event that this happens the Financial Services Compensation Scheme (FSCS) would pay compensation of up to £85,000 per account holder per authorised institution.

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