Fixed rate bonds are still one of the best ways to secure a decent return on your cash, but the thought of locking your money away for years on end can understandably be daunting. A suitable compromise could be a three-year bond.
Take a look at the best savings rates and you'll see that there are plenty of medium-term accounts that can help secure growth-generating rates, and three years could be the ideal term. Your returns are guaranteed too, unlike with a variable rate account. However, it's important to be aware of the restrictions.
In particular, most fixed rate bonds won't allow you to make further additions or access your funds early – and if they do they could penalise you heavily – so you'll need to be confident you won't need your chosen investment for the full three years.
You also need to make absolutely certain that you're choosing the best savings account for your needs, and we're happy to help with that! Here are the current top six three-year bonds that could help you secure a decent return.
Vanquis Bank takes the top spot with this account that pays a market-leading 2.25% from a minimum deposit of £1,000. While you'll have to give up access for the entire term, it could very well be worth it to secure this top rate.
Masthaven Bank sits in second place with a rate of 2.21% paid on a minimum investment of £500. The flexibility to add funds for a short time could prove tempting, especially for online investors.
Next up is Ikano Bank, whose three-year bond also pays 2.21%, this time from a minimum investment of £1,000. Additional deposits are allowed for 14 days after opening, but as there are no withdrawals before maturity, savers will have to ensure they won't need their funds for the full three-year term.
Milestone Savings secures fourth place with this deal that pays an expected profit rate of 2.21% from a minimum of £1,000. As a Sharia'a compliant account, it is ideal for those who like to invest ethically. However, with neither additional deposits nor early access to funds allowed, it must be decided from the outset exactly how much can be invested and left untouched for three years.
Next up is a three-year bond from Atom Bank, which pays 2.20% AER. There is a low deposit requirement of £50, additions are welcome for a week after opening, but access prior to maturity is not allowed. As the bond can only be opened and operated by mobile app, it is one for the tech-savvy only.
Completing the top six is this account from NS&I, which pays 2.20% on a minimum investment of £100. Additional deposits are not allowed, but funds can be accessed early with an interest penalty. It should be noted that no more than £3,000 can be paid into this bond and that it is online only. Nevertheless, the cast-iron depositor protection guarantees that come with NS&I accounts will always sway the argument for certain savers.
Information & rates correct as at: 01/03/2018