Fixed Rate Bonds are for a fixed period of time, known as the 'term'. Usually the longer the term, the higher the interest rate will be.
The interest rate payable on a Fixed Rate Bond remains the same from the time the account is opened until the end of the fixed rate period. There’s usually a minimum deposit needed to open a Fixed Rate Bond account. Depending on the type of account, interest will either be paid monthly or annually.
This is how they work for you and for us:
- YBS decides the amount of savings we want to attract and how long we want to hold those deposits.
- We work out the interest rate we can pay, this is based on the external money markets as well as our savings and lending plan for the year.
- We create a Fixed Rate Bond and put it on sale.
- New and existing customers make deposits into the bond. Usually, it’s just one payment, though we will keep accepting deposits whilst the bond is on sale.
- Once we’ve reached the target amount of savings, we stop taking deposits, usually with a few days’ notice.
- Customers leave their money in the account for the agreed period of time. At the end of the agreed period, the bond ‘matures’ and we add your interest to the money you deposited.
At this point, you can:
- Choose another bond with us, if there is one or more available.
- Withdraw your deposit and interest.
- Leave your money in the easy access account that the bond will mature into if you choose not to reinvest or withdraw.