Compare the best 18-month fixed-rate bonds
Discover all you need to know about 18-month fixed-rate bonds and compare accounts with interest rates up to 4.25% AER.
Fixed-rate bonds enable you to earn a higher rate of interest in return for locking your savings away for a set time. You can find fixed-rate bonds that last as little as 6 months or others that last for as long as 5 years. Here, we look at 18-month fixed-rate bonds.
Compare 18-month fixed-rate bonds
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How do 18-month fixed rate bonds work?
With an 18-month fixed-rate bond, you pay in a lump sum of cash and leave that money untouched for a term of 18 months. The interest paid on your savings is fixed for the term of the bond.
You won’t usually be able to top up your funds during the term and how much you need to pay into your account initially will depend on the provider. Some bonds only require a deposit of £100, but others will ask for as much as £5,000.
Withdrawals are not usually permitted during the 18-month term, but if they are you will typically need to pay a penalty fee. Often this is a number of days’ interest. Once the 18 months are up, your bond will mature and you can access your cash or move it to another account.
How to compare fixed-rate bonds
When comparing fixed-rate bonds, it’s worth keeping the following points in mind:
- What interest rate will I earn? When looking for an 18-month fixed-rate bond, you’ll want to hunt out the most competitive interest rate. Remember, this rate will be fixed for the term of the bond.
- What deposit is required? The initial deposit requirement will vary depending on the provider, so make sure you check to ensure you’ll be able to meet this requirement. It’s typically at least £500.
- Can I top up funds? Most fixed-rate bonds won’t accept further deposits once you’ve paid in your initial lump sum. However, some will let you pay in additional funds until the bond is removed from sale.
- Can I access funds early? You usually won’t be able to make withdrawals during the term of the bond, but if you can, there will typically be a hefty penalty fee to pay.
Are fixed-rate bonds a good investment?
Fixed-rate bonds enable you to earn a higher rate of interest compared to many other savings accounts. You can also rest assured that the interest rate won’t change during the term of the bond.
However, fixed-rate bonds will only be suitable for those with a lump sum to invest and those who can leave their funds untouched for a set time. An 18-month fixed-rate bond could be a good option for those who want the security of a fixed-rate bond but who don’t want to lock away their funds for too long.
It can also be a particularly good choice while interest rates are rising. Choosing a bond that lasts longer, say 3 to 5 years, could result in you being locked into an account that is no longer competitive if rates rise further.
Pros and cons of 18-month fixed-rate bonds
- Earn a fixed rate of interest for the term of the bond
- Interest rates are generally more competitive compared to easy access accounts
- Ideal if you have a lump sum to invest
- At a time of rising rates, an 18-month term makes more sense than, say, a 5-year term
- You won’t be able to withdraw cash during the term without penalty
- You can’t usually top up your funds during the term
- Interest rates will be lower compared to longer-term fixed-rate bonds
Choosing an 18-month fixed-rate bond can be a good option if you’d like to lock away your funds in return for a higher interest rate, but you can’t afford to leave your funds untouched for too long. However, you’ll need a lump sum to invest and remember that if you need to access your funds early, penalty fees can be high (if withdrawals are allowed at all).
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