🔔 18 month bonds – an effective middle ground?

Author: Dan Darragh
13th December 2018

An underused area of the fixed rate market by savings providers but these accounts could provide an interesting option for those looking at the shorter end of the term spectrum…


Traditionally providers stick to a tried and tested range of terms when it comes to fixed term accounts – with one year, two year, three year and five year options the norm.

However, for those prepared to look beyond the standard options, there are a few golden nuggets to be found within this admittedly limited market.

Let’s face it, 18 month fixed term accounts are not in vogue, with few providers offering them and very little demand from savers – although whether that’s because the information is not easy to come by is another matter.

To demonstrate, whereas there are well over a hundred one year accounts and a similar number of two year accounts available, there are only around fifteen 18 month accounts on the market – less than 15% of those more popular term lengths.

However, if we take the halfway point between the best one year bond (2.10% from Gatehouse Bank*) and two year bond (2.35% from Masthaven/Investec), anything paying 2.23% or more is a competitive rate in today’s fixed term market.

At the present time, two providers effectively pay a better rate than this halfway point between the best one and two year bonds.

Available since mid-September, BLME pays 2.25% gross/AER* on balances above £10,000.

And matching the rate on offer from BLME is Metro Bank, with an account that was launched at the very end of November.

Both the BLME and Gatehouse Bank options mentioned above are Sharia compliant accounts – take a look at our article below to read about how they differ to standard fixed rate bonds.

>> Find out more about Sharia compliant accounts

Interestingly, when you look at what was available this week in 2017, the top 18 month rate was 2.05% - just 0.05% higher than the best one year bond available at the time (2.00%), so rates have certainly improved in this area, with the differential now a much healthier 0.15%.

Perhaps this is a sign of better things to come in this area of the market and we will certainly be keeping a keen eye on this going forward

>> Compare the options above using our independent best buy tables

What you may have noticed is that we currently don’t feature 18 month bonds in our best buy tables, but if top rates like those above continue to be available and there is the demand for them, we may consider including them in the future.

In the meantime, you can get in touch with us at any time and we will run through all of the options available to you from the whole of the UK savings market and if this term is of particular interest to you, we can point you in the right direction.

So, if you are looking for a shorter-term fixed rate bond and are happy to tie your funds up for six months longer, then an 18 month bond could be a suitable option and while the number of options available are limited, there are some good deals to be found.

If you need any further help with finding the accounts that are most suitable for your needs, please call us on 0800 011 9705 to speak to one of our expert savings specialists.

*We are occasionally paid by some providers if you click through from our Best Buy Tables and open a savings or current account with them. We will never accept a payment that compromises in any way our independent, whole of market approach to providing information on savings products. For clarity we will indicate those companies who remunerate us with an asterisk (*).

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