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6 of the best short-term bonds

6 of the best short-term bonds

Category: Savings

Updated: 14/12/2017
First Published: 14/12/2017

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 guaranteed returns without asking you to lock your money away for too long - an 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. They're 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. Plus, with recent figures revealing that savings rates are doing much better than a year ago, 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 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

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 maturity and must be paid away
  • Sharia'a compliant account

Firmly in first place is this market-leading deal from BLME, which pays an expected profit rate of 2.05% AER, but only for those with a pot of at least £25,000 that they don't mind locking away 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 for top returns on an already healthy savings pot.


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

BLME is clearly a force to be reckoned with in the short-term market, with its 12-month bond securing second place and boasting the top rate for its term, an expected profit rate of 2.00% AER. 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

Al Rayan Bank

Al Rayan Bank

Fixed Term Deposit

1.91% 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

Completing the top three is this deal from Al Rayan Bank, which pays an expected profit rate of 1.91% AER (1.90% gross). It doesn't permit further additions or withdrawals, yet it could be a great choice for those with a smaller savings pot seeking a short-term home for their funds, provided you're willing to tie your money up for the full 18 months.


AER
Details

Investec Bank plc

Investec Bank plc

18 Month Fixed Term Deposit

1.90% AER

  • 18-month bond
  • £25,000 minimum deposit
  • No further additions, withdrawals or early access allowed
  • Account must be opened online, but can then be operated over the phone as well
  • Linked product: must open an Easy Access Account for transactional purposes
  • Interest paid on its anniversary and must be paid away

Next up is this deal from Investec Bank plc, another 18-month account, which pays a fixed rate of 1.90% to those with at least £25,000 to invest. As with the other accounts, no further additions are permitted and withdrawals won't be allowed until the full term is up, so savers must be comfortable with both their initial investment and the 18-month commitment.

AER
Details

Fidor Bank

Fidor Bank

Savings Bond

1.89% AER
  • 18-month bond
  • £100 minimum deposit
  • Further additions, withdrawals and early access not allowed
  • Account can be opened and operated online only
  • Interest paid on maturity and must be compounded
  • Linked account: must have or open a Fidor Smart Current Account for transactional purposes

In fifth place sits Fidor Bank, with its 18-month bond welcoming those with as little as £100 to put away. It offers a rate of 1.89% AER (1.90% gross) with, as usual, no early access allowed. This bond is therefore particularly suited for internet investors just starting to set money aside who are confident they won't need their funds for the full term.


AER
Details

United Trust Bank

United Trust Bank

UTB 1 Year BondGo to Site

1.87% AER

  • 12-month bond
  • £500 minimum deposit
  • No further additions, withdrawals or early access allowed
  • Account must be opened online, and can then be managed in branch or by post
  • Interest paid on maturity

United Trust Bank just manages to squeeze into the top six with its 12-month bond, which pays a fixed rate of 1.87%. Savers can open it online with a minimum investment of £500, after which no access will be allowed until the bond matures.

Information & Rates correct as at: 13.12.2017

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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