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6 of the best short-term bonds

6 of the best short-term bonds

Category: Savings
02/07/2018

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 guaranteed returns without asking you to lock your money away for too long – an ideal combination for those who are wary of more base rate announcements to come.

Short-term bonds can be perfect if you're planning a big purchase in the next year or so and want the best interest rate possible on a lump sum of cash. They're even more appropriate if you think rates could rise in the near future and are reluctant to tie your money up for too long.

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 fixed rate bonds 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)
Bank of London and The Middle East (BLME)
Premier Deposit Account
Go to Site
2.10%
(anticipated profit rate)
  • 18-month bond
  • £10,000 minimum deposit
  • No further additions, withdrawals or early access allowed
  • Account can only be opened and operated online
  • Linked product: must have or open a BLME current account to hold funds pending investment
  • Interest paid on the anniversary of the account opening and must be paid away
  • Sharia'a compliant account

BLME takes the top spot with this 18-month bond, which pays the market-leading expected profit rate of 2.10% to those with at least £10,000 to invest. It requires a linked BLME current account and, as with most other bonds, no further additions or withdrawals are allowed until the full term is up, so savers must be comfortable with both their initial investment and the 18-month commitment.

AER Details
Atom Bank
Atom Bank
1 Year Fixed Saver
2.05%
  • One-year bond
  • £50 minimum deposit
  • Additions allowed for one week from account opening
  • No withdrawals or early access permitted
  • Account can only be opened and operated through the bank's own mobile app
  • Interest paid on anniversary

In second place sits Atom Bank with the joint market-leading rate over 12 months, paying 2.05% for those who can put in at least £50. This bond requires interested savers to download the Atom Bank app and open the account via smartphone, but does allow additions for a week for some welcome flexibility.

AER Details
BLME
Bank of London and The Middle East
(BLME)

Premier Deposit Account
Go to Site
2.05%
(anticipated profit rate)
  • One-year bond
  • £10,000 minimum deposit
  • No further additions, withdrawals or early access allowed
  • Account can only be opened and operated online
  • Linked product: 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

Completing the top three is another account from BLME, this time with its 12-month deal, which also pays the (joint) market-leading expected profit rate over its term of 2.05%. All other features mirror its 18-month counterpart, with a pot of at least £10,000 as well as a BLME current account required to open the account. Therefore, this could be ideal for those who like the look of the top account, but don't want to lock their funds away for more than a year.

AER Details
Masthaven Bank
Masthaven Bank
18 Month Flexible Term Saver
Go to Site
2.00%
  • 18-month bond
  • £5,000 minimum deposit
  • Additions welcome for seven days after opening via nominated account
  • Withdrawals and early access not allowed
  • Online-only account
  • Interest paid on anniversary

Next up is Masthaven Bank, with an 18-month bond that pays a fixed rate of 2.00%. With additional deposits allowed for one week after you open the account, it provides a nice window of opportunity for those not sure yet how much they feel comfortable investing. As usual, no early access is allowed, so savers will want to ensure they won't need their funds back until the end of the term.

AER Details
Gatehouse Bank
Gatehouse Bank
Fixed Term Deposit Go to Site
2.00%
(expected profit rate)
  • One-year bond
  • £1,000 minimum deposit
  • No further additions, withdrawals or early access allowed
  • Internet-operated account
  • Interest paid on maturity and must be paid away
  • Sharia'a compliant account

In fifth place sits Gatehouse Bank (formerly Milestone Savings), with a one-year bond that pays a still highly competitive expected profit rate of 2.00% from a minimum deposit of £1,000. The usual restrictions on access apply, so savers will want to ensure they are happy with their deposit before signing up to this deal

AER Details
OakNorth
OakNorth
Fixed Term Deposit
Go to Site
1.97%
  • 18-month bond
  • £1,000 minimum deposit
  • Further additions, withdrawals and early access not allowed
  • Internet-operated account
  • Interest paid on maturity but must be compounded annually

OakNorth completes the top six, with its 18-month bond offering a rate of 1.97% on at least a £1,000 deposit. As usual, no early access is allowed, but this could still be a great choice for those who don't mind managing their savings online.

Information and rates correct as at: 27.06.2018

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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