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6 of the best short-term bonds

6 of the best short-term bonds

Category: Savings

Updated: 30/03/2017
First Published: 30/03/2017

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, 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:

AER Details

Bank of London and the Middle East (BLME)
Premier Deposit Account
1.55% AER
  • 18-month bond
  • £25,000 minimum deposit
  • Further additions, withdrawals and early access not allowed
  • Account must be opened online. It can then be managed by post as well
  • 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

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.

AER Details

Paragon Bank
One Year Fixed Rate
1.51% AER
  • One-year bond
  • £1,000 minimum deposit
  • Further additions within five days of account opening
  • No withdrawals or early access
  • Account can only be opened and operated online
  • Access via nominated current account
  • Interest paid on anniversary

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.

AER Details

Atom Bank
1 Year Fixed Saver
1.50% AER
  • One-year bond
  • £50 minimum deposit
  • Further additions permitted for up to one week after account opening
  • Withdrawals and early access not allowed
  • Account must be opened and operated by mobile app
  • Interest paid on maturity

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.

AER Details

Bank of London and the Middle East (BLME)
Premier Deposit Account
1.50% AER
  • 12-month bond
  • £25,000 minimum deposit
  • Further additions, withdrawals and early access not allowed
  • Account must be opened online and can then be managed by post as well
  • 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

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.

AER Details

Ikano Bank
Fixed 1 Year Saver
1.45% AER
  • 12-month bond
  • £1,000 minimum deposit
  • Further additions within 14 days of account opening
  • No withdrawals or early access
  • Internet-operated
  • Interest paid on anniversary

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.

AER Details

Shawbrook Bank
1 Year Fixed Rate Bond
Issue 44
1.45% AER
  • One-year bond
  • £1,000 minimum deposit
  • Further additions allowed while issue remains open
  • Withdrawals and early access not permitted
  • Account can be opened online or by post before becoming phone and internet-operated
  • Interest paid on maturity

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.

 
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