News

6 of the best short-term bonds
Category: Savings
09/08/2018

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 account 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.

Short-term bonds can give guaranteed returns without asking you to lock your money away for too long. Consider that with most providers still keeping quiet, it may well take a year and a half for savings rates to rise as fast as base rate, especially if you don't have a competitive account. If you don't have a look and maybe switch to one of the top rates, you could be missing out in the meantime.

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.

To get you started, here are the top six short-term bonds bonds currently on the market, all of which have terms of between 12 and 18 months:

AER Details
Wyelands Bank
Wyelands Bank
12 Month Fixed Term Account
Go to Site
2.15%
  • 12-month bond
  • £5,000 minimum deposit
  • Additions permitted for 14 days after opening via a nominated account
  • No withdrawals or early access allowed
  • Account can only be opened and operated online
  • Interest paid on maturity and must be compounded

Wyelands Bank takes the top spot with this one-year bond, which pays the market-leading rate of 2.15% to those with at least £5,000 to invest. While it allows further additions for a limited time, as usual withdrawals are not permitted until the full term is up on this internet-based account.

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
  • 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

In second place sits BLME, with the joint top anticipated profit rate of 2.10% over 18 months for those who can put in at least £10,000. This bond requires interested savers to open a BLME current account, if they don't already have one, but could be an especially appealing choice for those who don't want their cash used to fund weaponry or gambling, due to its Sharia'a compliant nature.

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

Completing the top three is Investec Bank plc, which also pays the joint market-leading rate of 2.10% over 18 months. Savers will require a pot of at least £25,000 as well as an easy access account with the same provider, but this could well be worth it considering its rate.

AER Details
Charter Savings Bank
Charter Savings Bank
Fixed Rate Bond
2.06%
  • 18-month bond
  • £1,000 minimum deposit
  • Additions welcome for 14 days after opening via nominated account
  • Withdrawals and early access not allowed
  • Online-only account
  • Interest paid on its anniversary

Next up is Charter Savings Bank, with another 18-month bond, this one paying a fixed rate of 2.06% on a minimum of £1,000. As additional deposits are allowed for two weeks after you open the account, savers can enjoy a short window of opportunity for those not sure yet how much they feel comfortable investing. As usual, however, no early access is allowed.

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

In fifth place sits Atom Bank, with a one-year bond that pays 2.05% from as little as £50. While additions are allowed for a little while, early access is not, and savers will want to be comfortable using the bank's mobile app before signing up

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

BLME completes the top six with its second account in the chart. This time, it's the 12-month version of its Premier Deposit Account, which pays an expected profit rate of 2.05% on at least a £10,000 deposit. Its other features mirror the 18-month version, making this a welcome alternative for those who like BLME but don't want to commit to a longer term.

Information and rates correct as at: 09.08.2018

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.