Fixed Interest Savings Certificates

Fixed interest saving certificates offer investors an agreed amount of interest on their capital for the duration of the investment period. All interest earned is tax-free. Currently fixed interest saving certificates are available for periods of two or five years. Usually, the interest rate that you receive will be lower than the rate offered by regular savings accounts. This is because the gross interest you are quoted for a normal account will have tax deducted. Fixed interest saving certificates are tax-free, and so you will receive all the interest that your money earns. If the certificate is cashed in before maturity however, interest rate penalties apply: if you cash in your certificates within the first year of investment, you would receive no interest at all on your funds. These certificates are issued several times a year, and each issue may have a different interest rate.

Fixed interest saving certificates guarantee investors tax-free returns on their capital. There is no protection against inflation however: the buying power of your money may reduce over the investment period. Since the interest rates offered are lower than those of regular savings accounts, they will prove the best investment for savers who pay income tax at the higher rate of forty percent. Fixed interest saving certificates provide a tax-efficient investment return.