6-month fixed-rate bonds
Compare monthly interest fixed-rate bonds without the boring research
Find a savings account that pays interest each month if you can lock up your money. Rates up to 5.25%.
Is my money safe?
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 wondering what a monthly interest fixed-rate bond is and how it compares to an annual interest fixed-rate bond, you’ve come to the right place.
Compare monthly income fixed-rate bonds
Table: sorted by interest rate, promoted deals first
1 - 30 of 177
Please note: This calculator provides estimations based on assumptions such as that you do not make withdrawals. You should always refer to the account provider for exact figures as they may vary from our results. Interest may be taxable.
How do monthly interest fixed-rate bonds work?
Monthly interest fixed-rate bonds pay interest on a monthly basis on a lump sum that you’ve saved up. Fixed-rate bonds require you to lock your lump sum away for a term of between 6 months and 5 years. You won’t usually be able to top up your funds during this time or withdraw any of your cash.
Interest is then paid on the money in your account – in this case, each month. Depending on the terms of the bond you opt for, your interest can either be added to the same account (where it will compound, meaning you earn interest on the interest) or you can have the interest paid to a nominated account (effectively providing a source of additional monthly income).
If your goal is to generate additional monthly income, look for an account which allows the interest to be paid to a separate account that you nominate.
At the end of the fixed term, the bond matures and you can withdraw your savings.
How to compare fixed-rate bonds
When comparing fixed-rate bonds, one of the biggest deciding factors will be how much interest you can earn. But while you’ll want to hunt out the highest interest rate possible, there are a number of other factors that you’ll need to consider. For example:
- The interest rate.
- When the interest is paid. While many banks pay annually, some will pay monthly.
- How the interest is paid. You can either let the interest compound or have it paid into your bank account.
- The minimum deposit requirement. This can vary, so make sure you check whether you have a large enough lump sum to be eligible for the account.
- The option to add more funds. Fixed-rate bonds won’t usually allow you to add further funds once you’ve made your initial deposit. However, some fixed-rate bonds will accept further deposits until the bond is removed from sale.
- The length of the term. You can usually choose a fixed-rate bond that lasts 6 months or 1, 2, 3, 4 or 5 years. Carefully consider how long you’re prepared to lock away your money for.
- The penalty fee. It’s also worth checking exactly what the penalty would be if you needed to access your money early. Some bonds won’t permit withdrawals at all, while others might charge a set number of days’ interest.
Is it better to get paid monthly or annually?
Choosing to have interest paid monthly can be a good option if you’re using it to supplement your income. However, remember that with some fixed-rate bonds, you won’t be able to access your interest! Opt for an account where your interest can be “paid away”.
When interest is paid back into the account each month, you benefit more from compounding. This is where you earn interest on the amount deposited, plus interest on the interest. The more regularly this interest is paid to your balance, the faster your savings will grow. Learn more about compounding here. However if you opt for your interest to be “paid away” to a separate account to provide an income, then that interest won’t get the opportunity to compound.
However, bear in mind that annual AERs generally already account for compounding. So a 4% AER bond paid monthly will generate the same return as a 4% AER bond paid annually. So, for example, if you paid £6,000 into an account paying 4% interest annually, you would have £240 after a year. If that 4% AER was paid monthly, you would earn £20 a month, which also equates to £240 a year.
Are fixed-rate bonds a good investment?
Yes, fixed-rate bonds can be a good investment for a number of reasons. For a start, fixed-rate bonds tend to offer higher interest rates than easy-access accounts, simply because you’re agreeing to lock away your money for a set time.
Generally, the longer you tie up your funds, the higher the interest rate you’ll be offered (though that’s not the case at the moment because rates are expected to fall, which the banks have factored in when deciding the long-term rates that they offer).
But with a fixed-rate bond you can rest assured that your interest rate won’t suddenly drop, as it could with a variable rate account.
Also bear in mind that fixed-rate bonds won’t be suitable if you don’t have a large lump sum to invest as you can’t usually top up your savings during the term.
Which are the best monthly interest fixed-rate bonds at the moment?
Our best monthly interest 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 savings accounts 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.
- Gatehouse Bank – 6 Month Fixed Term Woodland Saver - 5.25%
- ICICI Bank UK – SuperSaver Bond - 5.21%
- ICICI Bank UK – HiSAVE Fixed Rate Account - 5.11%
- Shawbrook Bank – 1 Year Fixed Rate Bond Issue 105 - 5.1%
- Atom Bank – 6 Month Fixed Saver - 5.1%
Pros and cons of fixed-rate bonds
Pros
- Pay a higher rate of interest than easy access accounts
- Interest can compound quicker when paid monthly compared to accounts that pay annually
- Ideal if you have a lump sum to invest
- Interest is fixed for the term of the bond
Cons
- You can’t usually withdraw funds before the end of the term without paying a fee
- You won’t always be able to add more money to the account
- Choosing a longer-term bond could result in you being locked into an uncompetitive account if rates rise
If you want to use your savings to supplement your regular income, opting for a fixed-rate account that pays interest into your bank account each month could be a good way to go.”
An overview of our monthly interest fixed-rate bonds comparison
| Rates up to | 5.25% AER |
|---|---|
| Number of accounts | 178 |
| Number of brands | 50 |
| Terms | 3 months - 7 years |
| Minimum investment | £1 |
| Maximum investment | £9,000,000 |
| Opening options | Website, branch, telephone, mobile app, post |
Bottom line
Provided you have a lump sum to invest and you are prepared to leave those funds untouched for a set time, a fixed-rate bond that pays monthly can allow you to earn a competitive, fixed rate of interest on your savings.
Opting for an account that pays interest into your bank account on a monthly basis could help to supplement your income — or you could even use it top up other savings. But if the interest payments can be compounded each month, you can enjoy the snowball effect of earning interest on your interest.
Frequently asked questions
We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you. Most of the data in Finder's comparison tables has the source: Moneyfacts Group PLC. In other cases, Finder has sourced data directly from providers.
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