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6 of the best short-term bonds

6 of the best short-term bonds

Category: Savings

Updated: 10/08/2017
First Published: 10/08/2017

Looking for a bit of extra security when it comes to your cash, but don't want a long-term commitment? That's where a short-term bond could come in. This kind of savings account can give decent returns without asking you to lock your money away for too long, the ideal combination given that it's difficult to know what's coming next.

Short-term bonds can be perfect if you're planning a big purchase in the next year or so and want the best interest rates possible on a lump sum of cash, and are even more appropriate if you think rates could rise in the next few years and are therefore reluctant to tie up your money for too long. And, given that fixed rates have been edging up recently - largely thanks to competition among challenger banks - now could be a great time to consider your options.

However, it's important to be aware of the restrictions associated with these kinds of savings accounts. Most won't let you make further additions, and earlier access (if permitted) could incur hefty penalties, so you'll need to be happy with both your investment and the term of the bond from the outset. But, if you've got a lump sum to invest and are confident you won't need the cash in the foreseeable future, these fixed rate bonds could be the ideal solution.

So, to get you started, here are the top six short-term bonds currently on the market, all of which have terms of between 12 and 18 months:

AER
Details

Al Rayan Bank

Al Rayan Bank

Fixed Term Deposit
Go to Site

2.06% AER
  • 18-month bond
  • £1,000 minimum deposit
  • Further additions, withdrawals and early access not allowed
  • Account can be opened and operated online, by post, in branch and by phone
  • Interest paid quarterly
  • Sharia'a compliant account

Taking the top spot is this deal from Al Rayan Bank which pays an expected profit rate of 2.06% AER (2.04% gross), making it the market-leader for its term. It doesn't permit further additions or withdrawals, yet it could be a competitive choice for those seeking a short-term home for their funds, provided you're willing to tie your money up for the full 18 months.


AER
Details

BLME

Bank of London and
the Middle East (BLME)

Premier Deposit Account
Go to Site

2.05% AER

  • 18-month bond
  • £25,000 minimum deposit
  • No further additions, withdrawals or early access
  • Account can only be managed by post
  • Linked product: savers must have or open a BLME current account to hold funds pending investment
  • Interest must be paid on anniversary and must be paid away
  • Sharia'a compliant account

In second place is this near market-leading deal from BLME which pays an expected profit rate of 2.05% AER, but only for those with a pot of at least £25,000 that they don't mind locking away for 18 months. It doesn't permit further additions or withdrawals and requires a linked BLME current account, but it could be a competitive choice if you're looking for decent returns on an already healthy savings pot.

AER
Details

Al Rayan Bank

Al Rayan Bank

Fixed Term Deposit
Go to Site

2.02% AER
  • 12-month bond
  • £1,000 minimum deposit
  • Further additions, withdrawals and early access not allowed
  • Account can be opened and operated online, by post, in branch and by phone
  • Interest paid quarterly
  • Sharia'a compliant account

Al Rayan Bank is certainly a force to be reckoned with in the short-term market, with its 12-month bond securing the number three spot and boasting yet another market-leading rate – the deal pays an expected profit rate of 2.02% AER (2.00% gross), the top rate for a one-year bond, with all other features mirroring that of its 18-month counterpart.


AER
Details

BLME

Bank of London and
the Middle East (BLME)

Premier Deposit Account
Go to Site

2.00% AER

  • One-year bond
  • £25,000 minimum deposit
  • No further additions, withdrawals or early access
  • Account can only be managed by post
  • Linked product: savers must have or open a BLME current account to hold funds pending investment
  • Interest paid on maturity and must be paid away
  • Sharia'a compliant account

Once again sitting close behind the market-leader for its term is the 12-month version of BLME’s fixed rate bond, which pays an expected profit rate of 2.00%. Its other features mirror that of the 18-month version, providing an attractive alternative for those with a hefty savings pot who don’t want to lose access to their funds for more than a year.


AER
Details

Shawbrook Bank

Shawbrook Bank

1 Year Fixed Rate Bond Issue 48

1.90% AER

  • One-year bond
  • £1,000 minimum deposit
  • Further additions allowed while issue remains open
  • No withdrawals or early access
  • Account can only be opened online, but can then be managed by phone as well
  • Interest paid on maturity

In fifth place is this deal from Shawbrook Bank, a one-year bond that pays a fixed rate of 1.90% from a minimum investment of £1,000. Unusually, further additions are permitted for a limited period, offering a measure of flexibility. However, as is common in the sector, no withdrawals will be allowed until the full term is up, so savers must be comfortable with the 12-month commitment.


AER
Details

OakNorth Bank

OakNorth Bank

Fixed Term Deposit

1.87% AER

  • 15-month bond
  • £1,000 minimum deposit
  • No further additions, withdrawals or early access
  • Account can only be opened and operated online
  • Interest paid on maturity (compounded annually)

Just squeezing into the top six is this 15-month bond from OakNorth Bank, which pays a competitive rate of 1.87% from a deposit of at least £1,000. This internet-operated account is a simple, straightforward deal for internet-savvy investors that doesn't permit additions or earlier access, so as with the other top-six bonds savers will need to be happy with their chosen term from the outset.

Information & Rates correct as at: 10/08/2017

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

 
 
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