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:
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.
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.
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.
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.
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.
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