What are savings bonds and how do they work?
A savings bond is a form of fixed-term investment. This means that, unlike flexible-access savings, your money is locked away for an agreed amount of time. Typically, the longer you commit to leaving your savings untouched, the higher your interest rate will be.
During this set period, you cannot access the cash in your bond, but you will earn a fixed amount of interest. If you do need to access it many providers will charge penalties for early withdrawals.
Because savings bonds have a fixed interest rate, you’ll usually know how much you’ll get once your fixed period is up. This can be useful if you have a goal in mind for your savings and can help you plan towards a specific financial objective.
