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Other Bank and Building Society Accounts

BANK and BUILDING SOCIETY

Fixed Term Account

(Also called Fixed Rate Bonds, Term Deposit Account, Fixed Term Deposits, Fixed Deposit Account)

Lump sum invested usually at a fixed rate of interest for a fixed term of 1 to 5 years. Withdrawals can sometimes be made, usually by losing interest on the amount withdrawn for the whole term or 3 or 4 months interest. Higher rates of interest and different lengths of term can be negotiated for larger sums but usually only for terms under a year.

Some banks and building societies operate Term Accounts where the interest rate is not fixed, but is guaranteed as a rate above the Share Rate, known as the differential. Apart from this guaranteed differential, that type of account operates like a Building Society 90 Day Notice Account.

Who can invest Anyone

How worthwhile Good value for terms of 1 to 3 years but some postal instant access accounts currently pay the same. They can also be obtained offshore. Taxpayers compare with Life Insurance Income Bond and Bank and Building Society Escalator Bond. Higher rate taxpayers compare with National Savings 2 or 5 year Fixed Issue Certificates. Non-taxpayers compare with National Savings Capital Bond. Terms over 5 years not recommended .

Minimum £1,000, £2,500, £5,000, £10,000.

Maximum Usually none.

Suitable Lump sums.

Money back At the end of the fixed term when the company usually notifies you. Some companies will return your money early if you have a good reason but may reduce the interest rate. If you die, investment plus full interest up to date is usually paid out.

Interest Usually fixed. With all companies, if interest can be paid monthly, it is less than the yearly rate.

Interest paid Usually yearly or on maturity; sometimes monthly. Direct to a bank or building society account, or left to accumulate. Not all companies pay all these ways. Monthly: see Bank and Building Society Monthly Income Account.

Tax 20% tax is deducted from the interest. Non-taxpayers can reclaim the tax from the Inland Revenue (or have interest paid with no deduction). Higher rate taxpayers have to pay extra tax; basic rate taxpayers don't.

Fees to pay None.

Passbook None. Statement usually sent half yearly.

Children Unsuitable.

Risk 100% compensation scheme on the first £35,000 since 1 October 2007 for each investor in each licensed bank or building society under the investors compensation scheme.

How to invest Look for companies offering good interest rates in the media. Best buys change and are usually issued as a limited offer. Former building societies pay most.

Where from Best fixed rates at : Click here for rates and phone numbers from Money£acts. See also detailed rates for the amount you want to invest from Moneynet.

Other Bank and Building Society Accounts

Last updated 15 October 2007.