The Financial Services Compensation Scheme (FSCS) guarantees that it will step in to compensate the first £85,000 (£170,000 for a joint account) you have saved with a UK-authorised bank, building society or credit union in the event that the business goes bust.
If you’re looking to earn a higher return on your savings but you don’t want to lock away your funds for a lengthy amount of time, a 6-month fixed-rate bond could offer the perfect solution. Here, we explain how 6-month fixed-rate bonds work, along with their pros and cons.
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’s 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.
However, at the moment, you actually get a better rate on a 6-month bond than you can on a 1-year bond (5.25% vs 5.17%).
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.
Make sure you keep part of your savings in an easy-access account.
Our best fixed-rate bonds are the highest interest rates available. To get the latest rates, we use Moneyfacts 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 | 5.25% AER |
|---|---|
| Number of accounts | 36 |
| Minimum investment | £1 |
| Maximum investment | £2,000,000 |
| Opening options | Branch, website, mobile app, post, telephone |
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.
See what you could earn monthly, annually or at bond maturity with our fixed-rate bond calculator integrated with live bond rates.
Discover more about 18-month fixed-rate bonds.
Discover more about how monthly interest fixed-rate bonds work.
Discover how to find the best fixed-rate bonds and how they compare to other savings accounts.
Discover all you need to know about 5-year fixed-rate bonds, including how to find the best one for you.
If you’re planning to save your money into a fixed rate bond, we take a look at how you can find the best 2 year option.
How to get the best 1-year fixed-rate bond. Here’s what you need to know.
