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6 of the best short-term bonds

6 of the best short-term bonds

Category: Savings
01/02/2018

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 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 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
Atom Bank
Atom Bank
1 Year Fixed Saver
1.95%
AER
  • £50 minimum deposit
  • Rate fixed for one year
  • Further additions allowed for one week from opening
  • Withdrawals and early access not permitted
  • Operated exclusively through Atom Bank's smartphone app
  • Interest paid on anniversary

Atom Bank easily takes the top spot with this deal that pays the market-leading rate in this sector of 1.95%. As long as you're happy to do your banking through a mobile app, you can open this account with as little as £50 and even add to this for a week. What's more, you'll only need to set aside your funds for 12 months, although no earlier access is possible.

AER Details
Al Rayan Bank
Al Rayan Bank
Fixed Term Deposit
1.91%
AER
  • 18-month bond
  • £1,000 minimum deposit
  • No further additions, withdrawals or early access
  • Account can be opened and operated by post, in branch, over the phone and online
  • Interest paid quarterly
  • Sharia'a compliant account

In second place sits Al Rayan Bank, with an 18-month deal that pays an expected profit rate of 1.91% AER (1.90% gross) on a deposit of at least £1,000. The account can be opened by a wide variety of routes, which might make it an appealing choice. However, it's worth bearing in mind that no access is allowed before the 18 months are up.

AER Details
Fidor Bank
Fidor Bank
Savings Bond
Go to Site
1.90%
AER
  • 18-month bond
  • £100 minimum deposit
  • Further additions, withdrawals and early access not allowed
  • Linked product: must have or open a Fidor Smart Current Account
  • Internet-based
  • Interest paid on maturity and must be compounded

Completing the top three is this deal from Fidor Bank, which pays a fixed rate of 1.89% AER (1.90% gross). As is common in this sector, it doesn't permit further additions or withdrawals, yet it could be a great choice for those with a smaller savings pot who are seeking a short-term home for their funds – provided you're willing to tie your money up for the full 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
1.90%
AER
  • 18-month bond
  • £25,000 minimum deposit
  • No further additions, withdrawals or early access allowed
  • Account must be opened online and then operated by post
  • Linked product: must have or open a BLME current account to hold funds pending investment
  • Interest paid on maturity and must be paid away

Next up is this deal from BLME, another 18-month account, which pays an expected profit rate of 1.89% AER (1.90% gross) to those with at least £25,000 to invest. It requires a linked BLME current account and as with most other bonds, 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
OakNorth Bank
OakNorth Bank
Fixed Term Deposit
1.87%
AER
  • 15-month bond
  • £1,000 minimum deposit
  • Further additions, withdrawals and early access not allowed
  • Account can be opened and operated online only
  • Interest paid on maturity but compounded annually

In fifth place sits OakNorth Bank, with its 15-month bond providing a nice alternative to the 18-month deals. It offers a rate of 1.87% AER with, as usual, no early access allowed. This bond is therefore particularly suited for internet investors who are confident they won't need their funds for the full term.

AER Details
Al Rayan Bank
Al Rayan Bank
Fixed Term Deposit
1.86%
AER
  • 12-month bond
  • £1,000 minimum deposit
  • No further additions, withdrawals or early access allowed
  • Account can be opened and operated online, by post, over the phone and in branch
  • Interest paid quarterly
  • Sharia'a compliant account

Al Rayan Bank just manages to squeeze another account into the top six, this time with a 12-month bond that pays a fixed rate of 1.86% AER (1.85% gross). All its other features match those of the 18-month bond, giving savers different terms to consider for their short-term investment.

Information & rates correct as at: 01/02/2018

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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