The Financial Services Compensation Scheme (FSCS) guarantees that it will step in to compensate the first £120,000 you have saved with a UK-authorised bank, building society or credit union in the event that the business goes bust.
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How we picked these
Putting your savings into a 6-month account can be a savvy way to earn interest on your cash and you’ll only need to lock it away for half the year. Here, we explain how 6-month fixed-rate bonds work, including their pros and cons, and we pick some of the best-paying options currently available.
If you open a 6-month fixed-rate bond, you’ll need to deposit a lump sum into the account and leave those funds untouched for the 6-month term. How much you need to deposit into the account varies depending on the provider – it could be £100, it could be £5,000. You won’t usually be able to top up these funds after your initial deposit.
You can’t typically make any withdrawals during the 6-month term, but in return you’ll receive a higher rate of interest compared to other savings accounts where you can access your money whenever required. What’s more, this interest rate will be fixed which means it won’t change during the term. After the 6 months is up, your account will mature and you’ll be able to withdraw your funds or have them transferred to another account.
Compared to a cash ISA, you can generally open a bond account with a much larger sum (but the interest is taxable). If you’ve sold your house, say, and won’t need the resulting funds for at least 6 months, then this is a smart resting place. Stick to banks/building societies covered by the FSCS, and it’s an extremely safe option too.
Bonds with a 6-month term will generally pay a lower rate than 9-month (or longer) terms.
If you were willing to commit to a 1-year bond, you could benefit from an extra 6.5% in interest (6.5% vs 0%).
When comparing fixed-rate bonds there are a number of factors to consider:
Provided you’re confident you won’t need to get at the funds, they’re likely to be more rewarding home for your savings than an instant access account.
The rate’s guaranteed, so you know in advance what your savings will be worth at the end of the term. And if you think that market interest rates generally are on the rise, then it’s probably smartest not to lock in for several years at today’s rate.
Just make sure you keep part of your savings in an easy-access account so you can get to these funds in an emergency.
Our best fixed-rate bonds are the highest interest rates available. To get the latest rates, we use Defaqto data, which covers nearly the full market of savings products and is checked and updated daily. We don’t include accounts from private banks.
All the fixed-rate bonds in our list have savings protection – for most, this is the Financial Services Compensation Scheme (FSCS). Other schemes include that of NS&I, which is 100% backed by HM Treasury, and the Gibraltar Deposit Guarantee Scheme.
| Rates up to | 4.35% AER |
|---|---|
| Number of accounts | 54 |
| Minimum investment | £1 |
| Maximum investment | £10,000,000 |
| Opening options | Branch, website, mobile app, post, telephone |
Thanks to successive Bank of England base rate rises, the interest paid on 6-month accounts is very similar to longer fixed-term accounts. Locking your money away for 6 months is a great way to earn some interest on your savings but only if you won’t need the money in that time. It’s wise to have around 3 to 6 months of your regular income in a separate instant access savings account, to use for life’s unforeseen emergencies such as a broken-down car or faulty washing machine.”
If you’re looking to earn a better rate of interest on your savings but you don’t want to lock away your funds for long, a 6-month fixed-rate bond could offer a good solution. Provided you have a lump sum to invest and you don’t need to access your funds for the 6-month term, a fixed-rate bond could work for you. Just make sure you check the terms and conditions of the account first.
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