Business bonds are more suited to business owners looking to set aside a lump sum for a fixed amount of time, but the advantage of this commitment is that interest rates tend to be higher on fixed rate business bonds than their variable rate (and more accessible) counterparts.
It’s important that you make a note of the bond maturity date, as if you forget to give instructions to your bank or building society ahead of time the funds will generally be transferred to a lower-paying variable rate account.
Money held in a business bond may fall under the protection of the Financial Services Compensation Scheme (FSCS).
A ’small business’ will be protected by the FSCS if it meets one of the following criteria:
Larger businesses will not be covered by the scheme.
The FSCS protects the first £85,000 an eligible business has held under a single UK banking licence.
If you suspect you may need access to your funds it may be better to choose a business deposit account with easy access – the interest you earn may be a bit less but you won’t incur any penalties if you do need to withdraw funds during the term.
Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.