The financial markets have changed a lot in recent months, which means many people could be seeking a bit of security when it comes to their cash. 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 also 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 lock your money away for too long. We don't want to get ahead of ourselves, but the last couple of weeks has seen a definite improvement in the savings sector, too, driven by challenger banks, who have been boosting rates across the market.
However, it's important to be aware of the restrictions associated with these kinds of 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 Atom Bank, a relative newcomer to the savings market but one that's taking the charts by storm! This purely mobile app-operated deal pays a joint market-leading rate of 1.50% and only asks you to lock your money away for 12 months, and it even 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.
In second place is this deal from BLME which pays an expected profit rate of 1.50% AER, 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.
BLME has done it again with a second account making the charts, this time the 12-month version of the Premier Deposit Account, which comfortably secures a top-three place. This Sharia'a compliant account pays an expected profit rate of 1.45% AER on a minimum investment of £25,000, with all other features mirroring those of its 18-month counterpart.
Next up is this 18-month deal from Al Rayan Bank, another Sharia'a compliant account that pays an expected profit rate of 1.41% AER on a minimum investment of £1,000. Further additions and earlier access won't be permitted, so savers will need to be happy with both their investment and the term from the outset.
Ikano Bank secures a top-five spot with this 12-month bond, which pays 1.40% 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, a common occurrence in this sector.
Just squeezing into the top six is this bond from Charter Savings Bank. It's an online-only account that pays 1.40% on a minimum investment of £1,000, and although the full 18-month term must always be served, it offers the chance for further additions to be made for a limited period, offering some flexibility.
Information & Rates correct as at: 02.02.2017
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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