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6 of the best short-term bonds

6 of the best short-term bonds

Category: Savings

Updated: 02/06/2017
First Published: 01/06/2017

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 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 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 recently, too, which means 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
Fixed Term Deposit
1.71% 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

Comfortably taking the top spot is this deal from Al Rayan Bank which pays an expected profit rate of 1.71% AER, easily 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, yet it could be a competitive choice for those seeking a short-term home for their funds.

AER Details

Al Rayan Bank
Fixed Term Deposit
1.61% 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 two spot by becoming another market-leader for its term. This one pays an expected profit rate of 1.61% AER, with all other features mirroring that of its 18-month counterpart.

AER Details

Charter Savings Bank
Fixed Rate Bond
1.58% AER
  • 18-month bond
  • £1,000 minimum deposit
  • Further additions within 14 days of account opening
  • No withdrawals or early access
  • Account can only be opened and operated online
  • Interest paid on anniversary

In third place is this bond from Charter Savings Bank, an online-only deal that pays 1.58% on a minimum investment of £1,000. 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 welcome flexibility.

AER Details

Charter Savings Bank
Fixed Rate Bond
1.55% AER
  • One-year bond
  • £1,000 minimum deposit
  • Further additions within 14 days of account opening
  • No withdrawals or early access
  • Account can only be opened and operated online
  • Interest paid on anniversary

Charter Savings Bank has done it again with a second deal making the charts, this time its one-year bond that pays a fixed rate of 1.55%. This internet-operated account again permits further additions, but not withdrawals, which could make the 12-month nature of the account slightly more palatable.

AER Details

Bank of London and the Middle East (BLME)
Premier Deposit Account
1.55% 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

Securing a top-five spot is this deal from BLME which pays an expected profit rate of 1.55% 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.

AER Details

Hampshire Trust Bank
1 Year Bond Issue 14
1.53% AER
  • One-year bond
  • £1,000 minimum deposit
  • No further additions or withdrawals
  • Account can be opened and operated online and by post
  • Interest paid on maturity

Hampshire Bank just squeezes into the top six with this one-year bond that pays a rate of 1.53% AER on a minimum investment of £1,000. It's a simple, straightforward deal that doesn't permit additions or earlier access, so savers will need to be happy with their investment and term from the outset.

Information & Rates correct as at: 01.06.2017

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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