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 account can give decent returns without asking you to lock your money away for too long, offering security without too much commitment, 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 returns possible, and are even more appropriate if you think rates could rise in the next few years and are reluctant to tie up your money for too long. Fixed bond rates have been edging up in recent weeks, too, and given that our latest research shows that 18-month bonds actually pay more than their two-year counterparts, a short-term deal could prove even more beneficial.
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 accounts 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:
Comfortably taking the top spot is this deal from BLME which pays an expected profit rate of 1.55% AER, the market-leader for its term, provided you're willing to tie up your money for 18 months. It doesn't permit further additions or withdrawals, and it requires a hefty minimum investment of £25,000 as well as a BLME-linked current account, yet it could be a competitive choice for those who already have a healthy savings pot.
In second place is this bond from Paragon Bank. It's an online-only deal that pays 1.51% on a minimum investment of £1,000, and although the full one-year term must always be served, it offers the chance for further additions to be made for a limited period, offering some flexibility.
Securing a top-three spot is this deal from Atom Bank. This purely mobile app-operated deal pays a rate of 1.50% and only asks you to lock your money away for 12 months, and it allows further additions for up to a week after account opening. However, it doesn't permit withdrawals, so you'll need to be comfortable locking your money away for the full term.
BLME has done it again with a second bond making the charts, this time the 12-month version of the Premier Deposit Account. This Sharia'a compliant account pays an expected profit rate of 1.50% AER on a minimum investment of £25,000, with all other features mirroring those of its 18-month counterpart.
Securing a top-five spot is this 12-month deal from Ikano Bank, which pays 1.45% from a minimum investment of £1,000. It permits further additions for a limited period, but once deposited those funds can't be withdrawn until the full 12-month term is up, as is common in this sector.
Shawbrook Bank just squeezes into the top six with this 12-month bond, an account that pays a rate of 1.45% AER on a minimum investment of £1,000. Further additions are allowed for a limited period, but earlier access won't be permitted, so savers will need to be happy with their chosen term from the outset.
Information & Rates correct as at: 30.03.2017
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.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.