Guide to structured deposits

Structured deposit accounts are a type of savings product where your returns are not guaranteed as they’re linked to the performance of investments or other underlying assets.

Typically, they require a commitment of between three and six years during which you will have no access to your money.

Structured deposits should not be confused with structured investments where your capital is also exposed to investment risk.

Like a traditional savings account, structured deposits are designed to return your capital on maturity, and your deposit will be protected under the terms of Financial Services Compensation Scheme (FSCS).

Structured deposit account vs a traditional savings account

There are two key differences between structured deposits and a traditional savings deposit account:

  • Returns are linked to the performance of investments or some other underlying asset: these could be share indexes, interest rates, foreign exchange, or a combination of these things.
  • Returns are not guaranteed. While structured deposits can offer better potential returns than other savings accounts, you may not get any returns at all. If you lock your capital away there's a risk that its real value will be eroded by inflation over time.

Choosing a structured deposit

Different structured deposit accounts will pay out their returns in different ways. Some structured deposits will aim to generate capital growth, a regular income, or a combination of the two.

In many cases structured deposits will offer a Cash ISA option protecting returns from income tax.

Before committing to an account, you should be sure that you will not need to access the money you put in until it matures. If you do withdraw early, penalty fees could mean that you get back significantly less than you put in. An emergency fund in an easy access savings account can provide a safety net to reduce the chance of needing access to your money before the term of the account ends.

Structured deposits terminology

Income plans

These aim to pay you an income on a regular basis – usually monthly, quarterly or annually – provided the underlying investments meet certain targets.

Kick-out plan

This means that the plan can mature early ("kick out") if the underlying investments meet their targets.

Growth plans

Any returns are paid when the plan matures, and are linked to the performance of the underlying investments. Potential returns may be capped.

Next steps

Fees, potential returns and other factors will differ between providers, so it's important to shop around and read the small print.

Last updated: 31 May 2015