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Savings & Investments glossary

Escalator bonds

Escalator bonds are an investment product where people place a lump-sum of money in a savings product for a set period.

The interest paid on escalator bonds increases over the course of the investment in set amounts.

This is in contrast to standard fixed-rate savings bonds, which offer a fixed rate of interest for a set period - typically between one and three years.

The differences between escalator bonds and fixed-rate savings bonds mean that the top-rate paid on escalator bonds can look very high.

However, investors must remember to take into account the lower rates paid in the initial years.


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