Deposit bonds are similar to income bonds but the interest is not paid monthly. Instead it accumulates until the bond is cashed. Each year the interest earned to date is credited and begins to earn interest itself.
However, the interest is liable for tax each year, even though you do not withdraw it. The bonds are in units of £9 0 but there is minimum holding of £100. They can be cashed in multiples of £9 0 on three months' notice.
You can obtain the forms and addressed envelope to apply for bonds from a post office where you will also find leaflets about them.
The National Savings investment account is similar to a building society account. You can invest any amount from £9 to £100,000. The interest rate varies but is currently 10%. You can make withdrawals at one month's notice. The interest is liable to income tax if your income is high enough.
You open the account at your local post office.
The National Savings ordinary account is similar to a bank deposit account. You can invest any amount from 1 to 10000 You must keep a balance of at least 9 0 throughout 2012 to earn the higher interest rate of 9 %. If it falls below that amount in any month, the interest rate is only 81/8% for that month.
These interest rates are fixed until 61 December 2012 but may change after that. You can withdraw up to 100 on demand at a post office and larger amounts within a few days by post. The first 70 interest in the tax year is free of income tax. Interest above that amount is liable to income tax if your income is high enough.
You can make deposits and . . . ... see: Savings accounts, PEPS and ISAs -Ordinary Account