The main difference between a savings account and a savings bond is that with a bond, you’ll be locking your money away for a set period of time. You’ll also typically need a lump sum of money by way of a deposit to open the bond. This can be anything from £1,000 to £10,000 depending on the account and you’re not usually able to top up your bond once you’ve made your initial deposit.

When your money is in a savings bond, you’re not able to access it but in return, you’ll earn a fixed amount of interest for the duration of your account’s term. They usually range from six months to five years.

At Furness Building Society, we offer a range of fixed rate bonds, starting at two years. Why not have a look at the available options here and check out the expected increase on your savings.

Usually, the longer you can lock your money away for, the higher yield interest rate you can get. There are some downsides to fixing for longer though, particularly if interest rates start to climb. If interest rates are rising, your bond could become uncompetitive but you’ll be locked in and unable to do anything about it.

A sensible place to start is by considering how long you’re prepared to tie up your money without accessing it and then compare the rates on different terms.

Easy access isn’t an option with savings bonds. If you want your money before your bond reaches maturity, in most cases you won’t be allowed. You should make sure you won’t need to dip into these savings for the agreed time frame.

Some bonds will allow earlier access but you’ll be required to pay a withdrawal penalty. This may come in the form of an early access fee or a loss of interest.

When a bond matures, you’re able to cash in your money. It’s up to you whether you reinvest this in another bond or you switch to an easy access savings account.

This will depend on how much interest you’ll earn and your personal savings allowance, which is dictated by the rate of income tax you pay. If you’re an additional rate taxpayer, you don’t get a savings allowance.

You can find out more about your personal savings allowance here.

Due to the life cycle of fixed rate bonds, you can often meet a particular savings goal more quickly and plan your finances more effectively. So if you have a particular savings ambition in mind, such as planning a wedding or starting a family, they can work well.

Savings bonds typically suit people that have the flexibility of locking their money away for a set period of time. So if you struggle with cash flow they may not be the best choice for you. You may wish to consider an easy-access savings account or ISA instead. Check out our available options here.

Similarly, if you want to make regular contributions into an account rather than depositing a lump sum, a bond may not be for you. Not only can you not withdraw your money but you aren’t able to add additional funds either.

No, you can’t lose any of the money you have deposited when you opened the bond. You may receive lower returns than with other accounts if interest rates start to rise during your fixed term. However, it’s important to consider that fixed rate bonds often have favourable rates compared with other savings accounts.