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.
Compare 6-month fixed-rate bonds
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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.
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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.
How do 6-month fixed-rate bonds work?
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 (4.81% vs 4.8%).
How to compare fixed-rate bonds
When comparing fixed-rate bonds there are a number of factors to consider:
The interest rate. Fixed-rate bonds offer fixed rates of interest which means the rate can’t suddenly drop during the term. Ideally, you’ll want to hunt out the bond with the highest rate.
The deposit size. Make sure you check exactly how much money you need to pay into the account at opening. Deposits can vary depending on the provider, but if your lump sum isn’t high enough, you’ll need to find an alternative 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. But some providers will accept additional deposits until the bond is removed from sale.
The penalty fee. Some fixed-rate bonds will simply refuse withdrawals. Others will charge a penalty fee if you access your funds early, so make sure you check.
Are fixed-rate bonds a good investment?
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.
Which are the best 6-month fixed-rate bonds at the moment?
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.
Oxbury Bank – Personal 6 Month Bond Account (Issue 3) - 4.76%
An overview of our 6-month fixed-rate bonds comparison
Rates up to
4.81% AER
Number of accounts
41
Minimum investment
£1
Maximum investment
£5,000,000
Opening options
Branch, website, mobile app, post, telephone
Pros and cons of 6-month fixed rate bonds
Pros
Earn a higher rate of interest compared to easy access accounts
Interest rate is fixed for the term of the bond
Ideal if you have a lump sum to invest
You’ll only be locking away your money for 6 months
Cons
No good if you need to access your money during the term
You won’t usually be able to add more money to the account
Interest rate will be lower compared to longer-term fixed-rate bonds
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.”
Bottom line
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.
Frequently asked questions
Yes, if your provider is authorised by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA) it must protect customer deposits under the Financial Services Compensation Scheme (FSCS).
This means that up to £85,000 of your money will be protected per person, per banking institution in the event your bank went bust. If this happens, you'll be able to make a claim to the FSCS and get your money back.
You can have as many fixed-rate bonds as you like. This means you could lock away some of your savings for a shorter term of 6 months and tie up another chunk of savings for 2 or 3 years, for example. Certain providers might limit the number of fixed-rate bonds you can hold with them, but you can always open more elsewhere.
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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Rachel Wait is a freelance journalist and has been writing about personal finance for more than a decade, covering everything from insurance to mortgages. She has written for a range of personal finance websites and national newspapers, including The Observer, The Mail on Sunday, The Sun and the Evening Standard. Rachel is a keen baker in her spare time. See full bio
How to get the best 1-year fixed-rate bond. Here’s what you need to know.
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