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6 of the best short-term bonds

6 of the best short-term bonds

Category: Savings
29/03/2018

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 the future.

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.

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

2.00% AER
  • 18-month bond
  • £25,000 minimum deposit
  • No further additions, withdrawals or early access allowed
  • Account must be opened and operated online
  • Linked product: 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

BLME takes the top spot with this 18-month bond, which pays an expected profit rate of 2.00% AER 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

BLME

Bank of London and
the Middle East (BLME)

Premier Deposit Account
Go to Site

1.95% AER

  • 12-month bond
  • £25,000 minimum deposit
  • No further additions, withdrawals or early access allowed
  • Account must 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

In second place is BLME once again, this time with its 12-month deal that pays an expected profit rate of 1.95% AER. The product details are the same as for the 18-month bond (except interest is paid on maturity), so a sizeable deposit that you can definitely live without for a year is a must.


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

Completing the top three is Al Rayan Bank, with an 18-month bond 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

Metro Bank

Metro Bank

Fixed Term Savings Account

1.90% AER

  • 18-month bond
  • £500 minimum deposit
  • No further additions, withdrawals or early access allowed
  • Account can be opened online or in branch and then operated over the phone as well
  • Linked product: must have a Metro Bank account or an Instant Access will be automatically opened
  • Interest paid on anniversary and must be paid away

Next up is this deal from Metro Bank, another 18-month account, which pays a rate of 1.90% AER (1.90% gross) from a minimum deposit of £500. The usual restriction on early access applies and a linked account is required.

AER
Details

Masthaven Bank

Masthaven Bank

18 Month Flexible Term Saver
Go to Site

1.88% AER
  • 18-month bond
  • £500 minimum deposit
  • Additions welcome for seven days after opening
  • Withdrawals and early access not allowed
  • Online-only account
  • Interest paid on anniversary and can be paid away or compounded

In fifth place is Masthaven Bank, with an 18-month bond that pays a fixed rate of 1.88% AER. While initially at least £500 is required to invest, additional deposits are then welcome for another week via a nominated account. However, early access to funds is not allowed and interested savers will have to be comfortable banking online, given that it is a purely internet-based bond.


AER
Details

OakNorth Bank

OakNorth Bank

Fixed Term DepositGo to Site

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

OakNorth Bank just squeezes into the top six, 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.

Information & Rates correct as at: 29.03.2018

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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