While cost of living pressures remain high and inflation continues to erode the real-term value of money, Britons have been searching for savings options that offer the highest returns possible. There are a number of accounts people can invest in, from easy access and regular savers to cash ISAs and fixed rate bonds, and each suits different needs and requirements. But with fluctuating interest rates, experts are urging savers to keep an eye on the market to ensure they’re opting into the best accounts of their kind.
Commenting on the current savings market, Rachel Springall, finance expert at Moneyfacts, said: “Savings rates rose across the market month-on-month showing positive signs of provider competition. The consecutive Bank of England Base Rate rises, coupled with competition among challenger banks, has led to both the average easy access and notice rates hitting their highest levels in more than 14 years.”
Ms Springall said the number of accounts overall on offer for savers has also grown, seeing its biggest month-on-month rise since March 2022 with choice now resting at the highest count since November 2022.
She added: “These are all encouraging signs for the months ahead, particularly as we edge closer to a new tax year.”
While there are currently no savings accounts that beat the UK’s staggering 10.1 percent inflation rate, some are offering particularly competitive returns. Express Money has put together a guide to the top savings accounts with high interest on offer right now – from easy access to cash ISAs, as per Moneyfacts’ Best Buys lists.
Best easy access savings accounts
While living costs remain high, easy access accounts are growing in demand for those needing the flexibility to dip into savings when needed.
These accounts typically allow savers to make payments and withdrawals instantly with minimal restrictions and with small opening deposit requirements.
Ranking top of the list is Yorkshire Building Society’s Rainy Day Account (Issue 2) with an Annual Equivalent Rate (AER) of 3.35 percent.
This account offers a competitive, two-tiered variable interest rate and savers can get started with just £1. The 3.35 percent rate is applied to balances up to £5,000, while a 2.85 percent rate is applied to balances over £5,000.01. Withdrawals are permitted on two days per year based on the anniversary of account opening, plus closure at any time.
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Chip’s Instant Access account places second, offering savers an AER of 3.15 percent.
The account can be opened online with just £1 and up to £250,000 can be invested. Instant withdrawals are permitted and interest can be paid away or compounded.
Zopa bank’s Smart Saver also ranks high with an AER of 3.07 percent.
There is no minimum deposit requirement and interest can be paid away or compounded, and savers can open an account using the Zopa app. Withdrawals are permitted without any penalties and up to £85,000 can be invested.
Best regular savings accounts
Regular savings accounts offer a particularly effective option for those keen to start building up a savings pot.
These accounts typically offer higher interest rates and the terms generally encourage savers to pay money into the accounts monthly. Savers just need to meet certain requirements on the respective accounts and they’ll earn interest on their savings on the basis they make minimal withdrawals and deposit regularly.
Topping the list is first direct’s Regular Saver offering an Annual Equivalent Rate (AER) of seven percent on up to £3,600 per year.
Interest is calculated daily and paid on maturity of the account exactly one year after opening. Savers can deposit between £25 and £300 per month in multiples of £5.
Withdrawals are not permitted throughout the duration of the 12-month term. In the event of this, the account will have to close and interest will be paid up to the closure date at the Savings Account variable rate instead.
The savings account is only available to Current Account holders, but those who switch banks are currently being offered a free £175 if they use the Current Account Switching Service (CASS) and deposit £1,000 within three months of opening.
NatWest’s Digital Regular Saver places second with an AER of 6.17 percent.
The 6.17 percent interest rate is awarded to savings up to £5,000, after which a 0.65 percent rate will be applied to savings from £5,001 and over.
There is no minimum deposit required to open the account and it allows people to save up to £150 each month. Unlimited withdrawals are permitted without penalty and interest is awarded monthly.
Placing third is Royal Bank of Scotland’s Digital Regular Saver, also with an AER of 6.17 percent.
Like NatWest, the same interest rules apply (6.17 percent paid up to £5,000, then 0.65 percent), interest is applied monthly, and unlimited withdrawals are also permitted.
Best fixed rate savings accounts
While interest rates fluctuate, fixed-term accounts offer an additional layer of certainty to saving. This is because they allow account holders to lock in the rate offered at the time of opening and currently, these kinds of accounts are offering some of the highest rates available on the market.
Al Rayan Bank is currently topping the list of one, two, and three-year fixed rate savings accounts, paying a profit of 4.37 percent, 4.47 percent, and 4.57 percent, respectively.
The bank operates under Shariah principles, which means people earn profit rather than interest on their savings. Applicants must be 16 years of age or over and have a minimum of £5,000 to invest in the account.
The profit is calculated monthly and will be paid quarterly to the nominated account or, people have the option to retain the deposit profit in their account to be paid all together on maturity. Savers will not be able to close the account or withdraw any of their funds before the date of maturity.
SmartSave’s Five Year Fixed Rate Saver takes the lead with a more long-term savings option with an AER of 4.51 percent.
A minimum investment of £10,000 is required to open the account and interest accrues daily and is paid gross when the term ends. Early withdrawals are also not permitted unless in exceptional circumstances, which is at the bank’s discretion.
Best cash ISA rates
Cash ISAs come with additional benefits, such as enabling savers’ money to grow without having to pay tax on the interest above the Personal Savings Allowance (PSA). However, they can come with a few more restrictions, like penalty charges for early access or transfers.
It makes the account a better savings option for those who can put money away and keep it there without touching it for a few years.
Virgin Money is currently offering savers an AER or 4.25 percent on its One Year Fixed Rate Cash ISA Exclusive (Issue 4). Interest is calculated daily and paid at the end of the fixed term on January 31, 2024.
Some or all of the money can be withdrawn during the fixed term, but it can’t be put back in, and any amount paid into the account will count towards the person’s annual ISA allowance limit even if they later withdraw it.
Savers will also be charged 60 days’ interest on the amount taken out during the fixed term.
Savers with Virgin Money can also have access to special deals across the wider Virgin Group that can help people save on everyday essentials, as well as bigger events like days out and holidays.
Gatehouse Bank’s Two Year and Three Year Woodland Cash ISA is currently offering AERs of 4.1 percent and 4.2 percent, respectively.
Gatehouse Bank operates under Sharia principles, which means profit is earned instead of interest. And with a Woodland Saver, a new tree planted in UK woodland per bank account opened or renewed.
The accounts require a minimum deposit of £1,000 to open and interest is paid on the anniversary. Withdrawals are also permitted for each account, however, a penalty charge will be added depending on the account.
The Two Year Cash ISA will be subject to a reduction in profit of 180 days, while the Three Year Cash ISA profit will reduce by 270 days.
Best children’s savings accounts
Children’s savings accounts provide a great opportunity to put money away for the future, and there’s a variety of accounts to choose from that offer different benefits.
Halifax’s Kids Monthly Saver tops the list of high interest children’s accounts with an AER of five percent.
This account is designed for an adult to put money away for a child and savers can deposit between £10 and £100 a month.
Interest is paid 12 months from opening the account and withdrawals are not permitted unless the account is being closed early.
Saffron BS’ Two Year Fixed Rate Children’s Bond places second with an AER of 4.4 percent.
The account can be opened with a minimum of £500 and interest is paid gross; without the deduction of tax, into the account or to another bank or building society on the anniversary, 16th birthday, or the day of maturity.
However, if the account falls below the minimum balance of £500, it will earn a variable rate of 0.05 percent gross/AER, until the account returns to the required minimum balance. No withdrawals are permitted until the two-year term ends.
Leeds Building Society’s Ronnie the Rhino Youngsaver is currently offering an AER of 3.9 percent.
Aimed at all ages up to 18, Ronnie the Rhino Youngsavers can make unlimited withdrawals signed by an authorised signatory while under the age of 12.
Once the account holder has turned 12, one £10-£250 withdrawal is permitted per week. Larger and additional withdrawals must be co-signed by the account holder and authorised signatory.
If the balance falls below £10, the rate of interest will drop to 0.05 percent. Interest is calculated daily and paid annually on June 30.
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