Pensioner Bonds launched today: go quick if you want one

Update: 10.16am, 19 January 2015:As of Saturday 17 January, more than 110,000 people deposited £1.1 billion into Pensioner Bonds, despite the website and phone line issues. See the full MSE Pensioner Bonds guide for the latest information and how to apply.

Pensioner bonds paying a market-leading rate of 2.8% for a one-year fixed term and 4% for three years are now on sale, but go quick if you want to save in them.

If you're aged 65 or over, you can now deposit a maximum of £10,000 into each of the two bonds (so a maximum of £20,000 per person, or £40,000 per couple), which work in the same way as a fixed savings account (see our Pensioner Bonds Guide for full information on how to apply and whether they're right for you).

Officially known as 65+ Guaranteed Growth Bonds, only £10 billion has been allocated for savers. This is only enough for 500,000 people if all of them make the maximum contribution.

For those who plan to put money into just one bond, it's best to go for the three-year option. Martin Lewis, founder and editor of MoneySavingExpert.com, explains: "The most important thing to understand is if you are only going to do one bond, do the three-year that pays 4%, not the one-year that pays 2.8%.

"That's because you only lose 90 days worth of interest if you withdraw early, therefore you can get the three-year bond, take your cash out after a year and you earn 3%, which beats the one-year bond. 

"The other important news is with only £10 billion worth available, as few as half a million over 65s could get a pensioner bond if everyone maxes their allowance. My guess is this won't be open for more than six to eight weeks, so go quick if you want it."

To show how good these are, the best other one-year bond pays 1.85%, while a typical three-year bond pays 2.51%. For more information on how to apply and whether pensioner bonds are right for you, see our Pensioner Bonds guide.