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 you 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.
Charter Savings Bank takes the top spot with this account that pays a market-leading 2.21% from a minimum deposit of £1,000. Providing some flexibility, additions are allowed for a limited time, but early access is not, so savers must be sure they won't need their funds for the entire length of the term.
National Savings & Investments (NS&I) sits in second place with a rate of 2.20% paid on a minimum investment of £100. The Government backing behind NS&I, combined with the ability to take your funds out early on an interest penalty, should make this a highly appealing option for many, though the maximum investment of £3,000 makes it less suitable for those with larger savings pots.
Completing the top three is another account from NS&I, which pays the same 2.20% on a slightly higher minimum investment of £500. This account does not allow additions, but funds can again be accessed early upon an interest penalty. It also allows you to put away much more than £3,000 and comes with more account management options, which could make it ideal for those with a large pot who don't like doing everything online.
Next up is this deal from Leeds BS, which pays a variable rate of 2.55% from a minimum investment of £50. For the height of flexibility, there's no minimum number of payments required and as a result no penalty for missing one. It's even possible to make additional payments to make up for previous months' missed savings.
The deal runs until a set date, with only one withdrawal allowed until then, so savers must ensure they won't need frequent access to their funds. The given date, 29 November 2018, could however make it ideal for a Christmas pot.
BLME secures fifth place with this deal that pays an expected profit rate of 2.20% from a minimum of £25,000. This account could be ideal for those with a large savings pot who won't need earlier access, especially if they'd like their funds to be invested ethically. Note that it does require you to open a BLME current account, if you don't have one already, and that interest is paid away into this account on a yearly basis.
Completing the top six is another account from perpetual favourite NS&I, this time with the monthly income version of its fixed rate bond. The account pays a rate of 2.17% AER (2.15% gross), with all other features mirroring its yearly-paying counterpart. If you're looking for a monthly income over three years while retaining some flexibility, this account could be for you.
Information & rates correct as at: 11/01/2018