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.
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.
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.
Bonds with a 18-month term will generally pay a better rate than 1-year (or shorter) terms but a worse rate than 2-year (or longer) terms.
However, at the moment, you can actually get a better rate (5.4% vs 4.97%) on a 1-year term. If you suspect that interest rates are likely to start to come down, then you may still prefer to "lock in" for 18 months, even if it's at a lower rate.
When comparing fixed-rate bonds, it’s worth keeping the following points in mind:
Fixed-rate bonds enable you to earn a higher rate of interest compared to most other savings accounts. You can also be 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.
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 | 4.97% AER |
|---|---|
| Number of accounts | 23 |
| Minimum investment | £1 |
| Maximum investment | £5,000,000 |
| Opening options | Branch, website, mobile app, post, telephone |
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).
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 how monthly interest fixed-rate bonds work.
Learn more about 6-month fixed-rate bonds and how to open an account.
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.