Maturity options

As your bond approaches maturity, it can be a good idea to explore your options. Whether you’re looking to reinvest your funds or explore other savings opportunities, this page outlines seven potential ways to use the money from your matured bond. Discover where to put savings to earn interest and what factors to consider in your decision-making process.

When your bond matures, it’s time to decide where to save the money. This is especially important if your financial situation or interest rates have changed since you first invested.

You could start by checking the bond yields offered for renewing your investment with the same provider. Your maturity letter will outline the current rates and terms, giving you a benchmark for comparison.

Next, you could check how much your investment has grown, as this will also determine what options are open to you. You’ll receive the original value of the bond, plus any interest gained. If you sold it early, you may have to pay a small penalty.

While there’s no one “best place” for savings, we’ve set out some of the ways you might reinvest your matured funds.

This information does not constitute financial advice. You should always do your own research to ensure that investments are right for your specific circumstances.

Once you’ve cashed in your bond, you’ll likely have a lump sum of money to decide what to do with. Our page on lump sum savings accounts could be a good starting point when looking at where to save money, as these accounts are designed for people with large amounts of money to put away.

You’ll probably be looking for top interest rates, which is why a high-yield savings account can be one of the best places to put savings. In fact, interest rates on savings are at their highest level for many years, so securing a fixed top rate now can pay off. If you’re open to some risk, investing could offer long-term rewards.

We’ve put together an overview of seven different options.

You might be wondering, “Where can I put my savings so that they earn interest?”. If the funds from your matured bond are worth at least £1,000, a fixed rate bond might be a suitable option. They offer a guaranteed interest rate over a set term, so you can keep growing your money.

Key points:

• Interest rate: Fixed rate bonds typically offer higher interest rates than an average savings account. In fact, Raisin UK currently offers rates of up to 5.03%.
• Term length: Your funds are locked away for a set period, typically ranging from six months to five years.
• Access to funds: Unlike typical savings accounts, you may have restricted access to your funds, or face a penalty for making withdrawals before the term is up.
• Minimum deposit: Keep in mind that some fixed rate bonds require you to deposit a minimum of £1,000, £5,000, or even £10,000.

If you prefer lower-risk options with a guaranteed return, a high-yield fixed rate bond can be one of the best places to put money from your bond so that it continues growing. Plus, with the cost of living remaining high, having your money set aside, and earning interest can provide some peace of mind.

Notice accounts sit in the middle of fixed rate bonds and easy access savings accounts, offering a balance between access to funds and a competitive interest rate.

Key points:

• Interest rates: Notice accounts usually offer higher interest rates than other accounts, and sometimes even fixed rate bonds.
• Notice period: To access your funds, you must give advance notice, which can range from 30 to 90 days or more.
• Minimum deposit: Many notice accounts require a minimum deposit, which could be higher than the amount you have from your matured bond.

If you appreciate having delayed access to your funds, minimising the temptation to withdraw them impulsively, a notice account might be a suitable choice.

If you enjoy the thrill of potentially winning prizes on your savings, Premium Bonds could be an option worth considering. Instead of earning fixed interest, your funds are used to purchase bonds that enter you into a monthly prize draw, where you have the chance to win tax-free cash prizes ranging from £25 to £1 million.

Key points:

• Prize draws: Unlike other options, there’s no guaranteed interest. Instead, you participate in monthly prize draws, which add an element of luck but also the potential for substantial rewards.
• Liquidity: You can easily access your money at any time without penalties.
• Security: Premium Bonds are backed by HM Treasury, making them a low-risk option.

Premium Bonds can be a good choice for your bond funds if you enjoy the excitement of prize draws and want easy access to your money. However, if you prefer the security of guaranteed returns, you may want to explore fixed-term savings or investment options.

Regular savings accounts can offer some of the highest interest rates available, but these rates often come with specific conditions that need to be met.

Key points:

• Interest rates: Rates vary based on the provider, but they are often higher than a standard savings account.
• Regular deposits: You usually need to make monthly deposits.
• Access and flexibility: Some accounts may impose restrictions or penalties for early withdrawals. Also, you might need to already have a current account with the particular provider to open a regular savings account with them.

Regular savings accounts could be considered one of the best places to save money to earn interest, as long as you are happy to commit to regular deposits. If you prefer to reinvest the lump sum from your bond without ongoing deposit requirements, you might consider alternatives like fixed rate bonds or cash ISAs.

The main advantage of cash ISAs over other savings types are their tax benefits, allowing you to earn interest up to a certain limit tax-free.

Key points:

• Tax benefits: Interest earned in a cash ISA is tax-free.
• Interest rates: Cash ISAs often offer competitive interest rates, especially fixed rate ISAs.
• Access and flexibility: You can choose between instant access ISAs, which let you withdraw funds any time, or fixed rate ISAs, which lock your money away for a set period.
• Annual allowance: For the 2024/25 tax year, the contribution limit is £20,000.

Cash ISAs could be suitable if your priority is a tax-efficient and secure place to grow your savings. The main downside could be the annual contribution limit, as you would have to make sure your reinvestment stays within this limit each tax year.

If you’re comfortable with taking on a bit more risk compared to your government bond, a stocks and shares ISA could be worth considering. It allows you to invest in a diverse range of assets, all within a tax-efficient wrapper.

Key points:

• Tax efficiency: Investments within a stocks and shares ISA grow tax-free, meaning you won't pay Capital Gains Tax on any profits or income tax on dividends.
• Potential returns: They provide the potential for higher returns compared to savings accounts, though they also come with higher risk due to market fluctuations.
• Investment choices: You can build a diversified portfolio that suits your risk tolerance and goals, including individual stocks, ETFs, or mutual funds.

Stocks and shares ISAs could be a good fit if you’re after potentially higher returns and are comfortable with some risk. Unlike savings accounts, however, investing is usually for the long term.

At a time when inflation can erode the value of money over time, some see property investment as a way to protect their savings and maintain purchasing power. This is because, as inflation rises, property values and rental incomes typically increase.

Key points:

• Potential returns: Depending on the location and market conditions, properties can provide steady rental income and appreciate in value.
• Initial costs: Investing in property can involve significant upfront expenses, including the purchase price, stamp duty, legal fees, and potential renovation costs.
• Ongoing costs: Property investment comes with ongoing expenses such as maintenance, insurance, and property management fees.

While it might not be the first thing you think of when deciding where to put savings, property investment may be ideal if you’re looking for a tangible asset. It offers potential for long-term growth and income but requires careful planning and commitment.

This information does not constitute financial advice. You should always do your own research to ensure that investments are right for your specific circumstances.

When choosing where to put your savings after a bond matures, an attractive interest rate is probably your top priority. High-yield savings accounts and fixed rate bonds often offer higher rates than standard savings accounts.

At Raisin UK, you can compare savings accounts based on the AER (Annual Equivalent Rate), which shows the annual return including compounding. This makes it easy to see which accounts offer the best returns.

Your financial goals could steer your decision on the best place to put savings from your bond.

• Short-term goals (like an emergency fund or a holiday) may be best suited for accounts with easy access, such as regular savings or easy access savings accounts.
• Long-term goals (like retirement or a mortgage) might benefit from options with higher returns, such as fixed rate bonds or cash ISAs, even if they lock your funds away for a while.

In the UK, you may have to pay tax on your savings interest, or capital gains on your investments. It can be worth factoring this into your decision.

The Personal Savings Allowance lets you earn a certain amount of interest tax-free from savings accounts:

• Basic rate taxpayers: £1,000 per year.
• Higher rate taxpayers: £500 per year.

Interest earned above these limits is taxed at your marginal rate. If the funds from your bond could be expected to generate significant interest, it is worth considering this when deciding where to put your savings.

It’s also important to note that any profits you make from selling investments such as stocks or bonds could be subject to capital gains tax.

This can help you decide the best place to put your savings, as you’ll likely want to maximise returns while minimising your tax burden. A tax advisor can give you tailored advice based on your financial situation and goals.

Are you still undecided about the best place to put savings from a matured bond?

Raisin UK has a set of guides on investing and saving:

At Raisin UK, you can easily compare interest rates across a range of savings accounts, including easy access accounts, notice accounts, and fixed rate bonds. All accounts are protected by the FSCS, covering deposits up to £85,000 per person, per bank.

Simply register for a free account, choose the savings option that fits your needs, deposit your funds, and watch your savings grow!