The best savings accounts

The Bank of England’s decision to cut the base rate to 0.1% has meant that interest rates on savings accounts have plummeted. There are now more than 100 savings accounts paying just 0.01% interest. “Based on the average cash Isa [individual savings account] balance of £5,144, it would take a saver 20 years to earn £10 from an account that paid 0.01% interest,” says Adam Williams in The Sunday Telegraph.

Rates have been slashed on more than 600 savings accounts, but while many accounts are paying just 0.01%, there are still some worth considering.

For example, Investec Bank’s E-asy Access Account pays 1.2%, but you do need to deposit at least £10,000. For smaller amounts Marcus pays 1.2% too. Both those accounts have to be opened and managed online. If you prefer telephone or postal banking, then National Savings & Investments’ Income Bonds pay 1.16%.

The top savings accounts with notice periods

If you don’t need to have instant access to your cash, then you can boost your returns by opting for a notice account. These still allow you to access your money as often as you want, but you have to plan and give a set number of days’ notice before you withdraw your money.

In return for 95 days’ notice both ICICI Bank and Investec Bank will pay you 1.6% interest with a minimum opening balance of £1,000 or £10,000 respectively (though ICICI Bank's rate is due to fall to 1.4% from 15 June 2020, and you must hold a current account with them). Secure Trust has a 30-day notice account that pays 1.31% if you can’t plan three months in advance.

The absolute best interest rate available on a savings account at present is from UBL UK at 1.95%. But it is a seven-year bond. That’s a long time to lock your money away at a rate that is only marginally better than you can get on a 90-day notice account. A better option may be Vanquis Bank’s one-year bond paying 1.6%.

If you are looking for a new home for a cash Isa, Shawbrook Bank is paying 1.19% on instant-access Isas. You can only get a better return with a one-year bond – the best is 1.3% from the Post Office. There is a minimum investment of £500, you may make just one deposit, and if you withdraw after 14 days you will incur a breakage charge.

Finally, don’t overlook Premium Bonds. “National Savings & Investments... has cancelled a planned cut to the prize rate on Premium Bonds,” notes Leke Oso Alabi in the Financial Times. The prize rate – the annual return an averagely lucky bond holder should achieve – will remain at 1.4%, with the odds of winning a prize (between £25 and £1m) in the monthly draw staying at 24,500 to one. Premium Bonds “can be a useful place to keep your emergency savings”, says Sarah Coles, personal finance analyst at Hargreaves Lansdown. “It’s easy to get hold of your cash, they offer the chance of a prize and there’s [the] hope that your sensible safety net will win you £1m.”