For fixed rate cash bonds, you’ll receive a guaranteed interest rate in return, provided you don’t access your money before the period ends.
There are various types of savings bonds available, each offering different returns on your savings.
Here, we look at:
Unlike most savings accounts, where you make regular deposits to your savings, you’ll only make an initial deposit to your bond. Some providers may give you a window to add to the deposit (usually up to 14 days), but you won’t be able to add more money once this window closes.
The initial deposit required will also vary – usually between £100 and £5,000, depending on your provider and bond type and provider. The interest rate of your bond will determine the returns on your savings.
Before applying for a savings bond, make sure you can comfortably set aside money for the entire period. Closing your account early or withdrawing money may lead to withdrawal fees or lower interest rates.
If you need regular access to your savings, we have ISAs and savings accounts that may be more suitable.
There are many types of savings bonds available. However, their availability may differ among providers. The most common bonds include:
The most suitable one for you depends on your personal saving goals and circumstances.
Fixed rate bonds, also known as fixed rate savings accounts, offer you a fixed amount of interest for the duration of the bond’s period (or ‘term’). The interest you earn on your savings will remain the same, regardless of any changes in the market.
If you want to know exactly how much interest you'll earn, a fixed rate bond may be the right choice.
Find out more about an HSBC Fixed Rate Savings Account. Eligibility criteria apply.
Tracker bonds offer interest tied to a specific index, like the Bank of England Base Rate. This means your returns will depend on changes in the Base Rate and can go up or down.
Tracker bonds adjust the interest in line with the Base Rate, which can help your savings keep pace with things like the cost of living.
HSBC doesn’t currently offer tracker bonds.
Premium bonds are slightly different from tracker and fixed rate bonds.
Instead of earning interest, you can win a tax-free prize in monthly draws. These prizes can be payments between £25 to £1 million.
Although the chances of winning may be slim, you have the potential to make large financial gains. This can make a premium bond very appealing.
HSBC doesn’t currently offer premium bonds.
Once your bond term ends, you can withdraw or transfer your money into another account.
Typically, you’re unable to transfer your bond to someone else. However, if you buy a premium bond for a child under 16, you must nominate a parent or guardian to manage the bond. The provider will then transfer bond management to the child once they turn 16.
The interest earned on fixed rate bonds is taxable. However, most people can earn some interest on their savings without paying tax.
Depending on what income tax band you’re in, you may get up to £1,000 of tax-free interest. This is your personal savings allowance.
For more information, visit GOV.UK: Tax on savings interest
Remember – that tax rules can change, and any benefits will depend on your circumstances.
If you’re looking to build your savings and have some money to set aside, a savings bond can help you reach your financial goals. To find the most suitable savings product, research various savings bonds, accounts, and ISAs before deciding.
