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6 of the best short-term bonds

6 of the best short-term bonds

Category: Savings
Author: Lieke Braadbaart
Date: 04/10/2018

Short-term bonds can give guaranteed returns without asking you to lock your money away for too long. This can be ideal 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.

Even if you don't have a specific goal in mind, putting your money away for a year to a year-and-a-half can give you the peace of mind that your savings are gaining a guaranteed rate of interest, without losing access for too long. Additionally, now could be the perfect time for such a decision, as the current economic uncertainty might well last for another year.

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) may 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 have 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.

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
2.25%
(anticipated profit rate)
  • 18-month bond
  • £10,000 minimum deposit
  • No further additions, withdrawals or early access allowed
  • Linked product: must have or open a BLME current account to hold funds pending investment
  • Account can only be opened and operated online
  • 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 anticipated profit rate of 2.25% to those with at least £10,000 to invest. As is common among these accounts, additions and withdrawals are not permitted on this internet-based bond. Interested savers will also need to open a BLME current account, but the chart-topping rate could easily make this worthwhile.

AER Details
Al Rayan
Al Rayan Bank
Fixed Term Deposit
2.22%
(anticipated profit rate)
  • 18-month bond
  • £1,000 minimum deposit
  • No further additions, withdrawals or early access allowed
  • Account can only be opened and operated through all channels (internet, branch, post, phone and mobile app)
  • Interest paid quarterly
  • Sharia'a compliant account

In second place sits Al Rayan Bank, offering an anticipated profit rate of 2.22% AER (2.20% gross) over 18 months for those with a minimum of £1,000. This bond does not allow additions or early access either, but it does give customers plenty of account management options.

AER Details
Charter Savings Bank
Charter Savings Bank
Fixed Rate Bond

2.11%
  • 18-month bond
  • £1,000 minimum deposit
  • Additions welcome for 14 days after opening via a nominated account
  • Withdrawals and early access not allowed
  • Online-only account
  • Interest paid on its anniversary

Completing the top three is Charter Savings Bank, which pays 2.11% over 18 months. Savers require a pot of at least £1,000 and will be able to add to this for two weeks through a nominated account, but as usual, early access is not possible before the 18 months are up.

AER Details
Investec Bank plc
Investec Bank plc
18 Month Fixed Term Deposit
Go to Site
2.10%
  • 18-month bond
  • £25,000 minimum deposit
  • No further additions, withdrawals or early access allowed
  • Linked product: must open an easy access account for transactional purposes
  • Account can only be opened online, but then operated over the phone as well
  • Interest paid on its anniversary and must be paid away

Next up is Investec Bank plc, with an 18-month bond that pays a fixed rate of 2.10% for those who have a minimum of £25,000 to put away. Once again, additions and withdrawals are not allowed with this competitive account, and savers will need to open an additional easy access account.

AER Details
Masthaven Bank
Masthaven Bank
18 Month Flexible Term Saver
2.05%
  • 18-month bond
  • £500 minimum deposit
  • Additions allowed for seven days after account opening via a nominated account
  • No withdrawals or early access permitted
  • Internet-operated
  • Interest paid on the anniversary of the account opening

In fifth place sits Masthaven Bank, with another 18-month bond, this time paying 2.05% from a relatively minor £500. While additions are allowed for a little while, early access is not possible on this online-only account.

AER Details
OakNorth
OakNorth
Fixed Term Deposit
Go to Site
2.05%
  • 18-month bond
  • £1,000 minimum deposit
  • No further additions, withdrawals or early access allowed
  • Account can only be opened and operated online
  • Interest paid on maturity and must be compounded

OakNorth completes the top six with another account that pays 2.05% over 18 months, this time on a £1,000 deposit. While there is no possibility of access before the account matures, this online-only bond still offers a strong option for savers with a smaller pot.

Information and rates correct as at: 04.10.2018

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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