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Moneyextra.com Dictionary
Term / Bond Accounts
Term accounts or savings bonds could be the right savings accounts for your money if youre prepared to tie up a lump sum for any period between three months and 10 years. However there are few products available at these extremes of the term accounts market-place. You will have more choice among bonds with a fixed term of one or two years. What you get with savings bonds and term accounts is a fixed rate of interest for the life or term of the bond. Theres usually a maximum and a minimum stipulated investment so you wont be able to add to the capital invested without purchasing a different bond which may have a different rate of interest. If youre looking for a guaranteed income with low risk and you are prepared to put a capital sum of money beyond your reach then savings bonds and term accounts could provide the answer youre looking for. You may choose between accounts that pay interest annually or monthly. If savings bonds are offering high interest rates it may be because the issuer is expecting rates to rise over the term whereas if term accounts rates are low it may be because the company is expecting interest rates to fall. Very few term accounts allow you to make a partial withdrawal of your funds. It is more common to be required to cash in the account entirely and if you do so before the end of the term you will lose interest and you may be subject to a further penalty as well. ©Moneyextra.com Moneyextra.com recommends you take independent financial advice before acting on any article 2009-02-17 00:00:00 © Moneyextra.com