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6 of the best short-term bonds

6 of the best short-term bonds

Category: Savings

Updated: 29/06/2017
First Published: 29/06/2017

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. Especially since standard rates have been edging up recently, 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 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:

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 and is therefore the market-leader for its term, provided you're willing to tie your money up for 18 months. 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.


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 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 for those with a hefty pot of at least £25,000 who are willing to tie their money up 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 to secure a 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 currently crowned the market-leader for its term. This deal pays an expected profit rate of 2.02% AER, 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 bond, which pays a 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

OakNorth Bank

OakNorth Bank

Fixed Term Deposit

1.82% 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)

In fifth place is this 15-month bond from OakNorth Bank, which pays a competitive rate of 1.82% on a relatively low minimum investment requirement of £1,000. This internet-operated account does not allow early access, as is common in this sector, yet the 15-month offer could be considered by some more appealing than a longer 18-month wait.


AER
Details

OakNorth Bank

OakNorth Bank

Fixed Term Deposit

1.81% AER

  • 12-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)

OakNorth Bank just manages to squeeze another account into the top six, with the 12-month version of its fixed bond paying a rate of 1.81% AER on a minimum investment of £1,000. It's 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 investment and term from the outset.

Information & Rates correct as at: 29.06.2017

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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