SAVINGS BONDS

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Savings Bonds are perfect if you are looking to invest a lump sum of money and do not need access to your funds. Savings bonds differ from normal savings accounts as they have a fixed set period – usually one, two, three or five years and the interest rate does not change. You should consider several things when choosing whether to invest your money in a bond, mainly when might you need the money? Remember that you will not be able to access your money during the fixed period of the bond. You must therefore ensure that you can afford to lock your money away during this time. See below a list of savings bond providers for you to compare. Which Way To Pay gives you information on interest rates, withdrawal access and any extra features.

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Why is saving important?

People put money away for any number of reasons. You might want to save for something in specific like a house, car, a holiday or wedding, your children’s future. It could be that you want to put some money way so you are covered should anything unexpected happen like you lose your job or need to pay for emergency home or car repairs.

If you want to put money aside then a savings account is where you can safely put your money, where it will earn interest over time. Savings accounts are bank accounts that people use, first and foremost, for keeping excess money safe. Savings accounts are a really easy way of growing your personal fortune and there is little risk involved.

What are Savings Bonds ?

If you do not need to access your funds and you want to invest your money then a Savings Bond might suit you. Savings Bonds are very different from savings accounts because most savings accounts have a fixed set period which is usually anywhere up to five years and the interest rate will no change. A savings bond should only be considered if you are sure you won’t need to access your money. If you think you will in the near future you might want to consider a savings account. With a savings bond it is unlikely that you will be able to access your money during the fixed period of the bond.

Finding the right product

As with any financial product it is important that you make sure this is the right option for you. You also need to make sure you take the time to research what’s available on the market. A great way of finding the right product for you is to compare different products against each other. Before you sign anything make sure you read the small print thoroughly.

What are the risks associated with savings bonds?

Usually savings bonds run for 1 – 5 years and pay a guaranteed rate of interest for the duration of the term. However, this can vary so it is important that you shop around for the best account for you. Remember that if you decide to put your money into a fixed rate bond, you will not be able to access your money during the fixed term. Most banks forbid you to take any money out during the term and if you do then you are likely to apply an interest penalty or be forced to close you account early so you lose your higher interest rate. You should also consider what interest rates are likely to do in the future when you are weighing up this type of account. If you fix the interest rate, and the interest rate goes up, you could find that you are not receiving the best interest rate on the market.

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