Earn 4.1% from the best savings accounts
With inflation topping 10%, your savings won't keep pace with the rising cost of living. But you can at least slow the rate at which your money is losing value, with interest rates of up to 4.1%. Here, we pick the best savings accounts on the market now.
The Bank of England raised interest rates to 2.25%. Since December 2021, the base rate in the UK has risen from 0.1% and now stands at a 14-year high.
For borrowers, higher interest rates are bad news as mortgages will typically rise in line with the base rate. But for savers, it’s a different story. Savers were the losers of the ultra low interest-rate era.
But now savings rates are climbing. So keeping an eye out on different saving accounts is more important now than ever before.
Clearly, with inflation in double digits, your savings are not going to keep pace with the cost of living. You will still be losing money in “real” terms – that is, your money won’t buy you as much in the future as it will today. However, by being picky with your savings rate, you can at least slow the rate at which your money is losing value.
What types of savings accounts are there?
The main consideration when picking a savings account, other than the interest rate on offer, is whether or not you are willing to lock your money away for a set period of time.
An easy-access account will allow you to withdraw money in the same way you would from a current account without any restrictions or penalties. Fixed-term savings accounts, also sometimes described as fixed-rate bonds, usually offer higher interest rates as savers typically cannot move until the end of the term.
So in other words, easy-access gives savers greater flexibility but lower returns, while fixed-term savings accounts give higher potential returns but are more limiting if you want the option to withdraw money when you need it.
Even if you are able to lock up your money for a period of time, there’s something else to consider, and that’s the direction of interest rates. If you fix your savings rate now, you will miss out on future increases in rates. And for now at least, markets think that further rate rises are likely.
As such, while it might be possible to earn a higher interest rate today by locking your savings away for a year or more, it might be best to stick with easy-access savings accounts for the time being.
If rates continue to rise, these accounts should pass them on to consumers. If not, you can always pull your savings out and invest elsewhere.
The best easy-access savings accounts
Nationwide FlexDirect current account – 5%
Nationwide’s FlexDirect current account gives customers 5% on cash balances up to £1,500 for the first 12 months, after which this drops to 0.25%. The account also comes with an interest-free overdraft but to get this deal you must pay at least £1,000 a month into the account.
Al Rayan Bank Everyday Saver – 2.1%
Al Rayan Bank's Everyday Saver is a Shariah-compliant account that offers an expected profit rate of 2.1%. The account must be opened and operated online and has a minimum investment of £5,000.
Virgin Money M Plus account – 2.02%
The Virgin Money M Plus account is one of the country’s highest paying national easy-access accounts offering 2.02% AER (annual equivalent rate) on balances up to £1,000. The M plus current account comes with a linked savings account called the M Plus Saver which gives 1.71% variable interest on balances up to £25,000 and 0.75% for balances above this amount.
Zopa Smart Saver – 1.85%
The Zopa Smart Saver offers 1.85%. The minimum deposit required is £1, and the maximum deposit is £85,000. This account can only be opened via Zopa’s mobile app. You can make unlimited withdrawals, though the interest rate is variable.
Shawbrook Bank Easy Access Account – 1.81%
Shawbrook Bank offers 1.81% with a minimum deposit of £1,000. The maximum balance is unlimited. This account can be opened and managed online and there is no penalty charge or fee on withdrawals.
Secure Trust Bank – 1.8%
Secure Trust Bank offers 1.8% with a minimum deposit of £1,000. The maximum balance is unlimited. This account can be opened and managed online and there is no penalty charge or fee on withdrawals.
The best one-year fixed-term accounts
Oxbury 1 year bond – 3.65%
This account gives customers 3.65% on cash balances and it can be opened and managed online.
Charter Savings Bank – 3.55%
This account offers 3.55% AER and requires a minimum deposit of £5,000, with a maximum deposit of £1m. This fixed-term account does not allow any withdrawals during the period, so it's important you only deposit the money you are sure you won’t need during that time.
Atom Bank 1 Year Fixed Saver – 3.45%
This account can be opened with just £50 online and it can be managed via a smartphone app.
OakNorth Bank 1 Year Fixed Term – 3.36%
This account offers 3.36% for 1 year, with a minimum deposit of £1 and a maximum deposit of £500,000. Withdrawals are not permitted in the one-year period, so only deposit the money you don’t need access to.
The best two-year fixed-term savings accounts
Atom Bank 2-Year Fixed Saver – 4.1%
This account can be opened with just £50 online and it can be managed via the app.
Oxbury 2-Year Bond – 4.1%
This account gives customers 4.1% on cash balances and it can be opened and managed online.
SmartSave Fixed Rate Saver – 4.02%
The SmartSave Fixed Rate Saver offers 4.02%. The account requires a minimum deposit of £10,000 and a maximum deposit of £85,000.
The account doesn’t allow withdrawals, and must be funded with minimum deposit within 14 days of opening the account.
Charter Savings Bank – 3.75%
This account offers 3.75%. You need to deposit a minimum of £5,000 and the maximum amount allowed is £1m. Withdrawals are not permitted with this account.
Hampshire Trust Bank – 3.71%
This account offers 3.71% for 2 years, with a minimum deposit of £1 and a maximum deposit of £250,000. You can open and manage this account online. Withdrawals are not permitted in the two-year period, so only deposit the money you don’t need access to.