Low saving rates mean you’re losing out in real terms against the inflation rate. So what can you do? Here are my top places to put your cash to make as much as 5%.

(This article is updated at the start and the middle of each month after inflation rate announcements and any significant account changes. New videos are at the start of the month.)

You want to make sure you’re getting the best rate on your savings – not just to earn the biggest possible return but also to ensure you earn more than inflation.

The latest inflation rate (for May 2020) was 0.6%. This low rate means more savings accounts beat it now than in recent months, but the vast majority of accounts are well below this. 

We’re a long way now from when we could get 5%, with rates slowly dropping over the last few years. And for the last few months we’ve seen another run of drops across leading savings accounts.

In May Nationwide reduced the rate on it’s FlexDirect from 5% to 2%, while TSB’s Classic Plus account was cut from 3% to 1.5%. And the market-leading easy-access savings accounts such as the one from Marcus was cut twice in three weeks to just 1.05% before it was closed to new customers.

If they haven’t yet, more will follow now the base interest rate has been cut to an all-time low of 0.1%.

Fortunately, there are a handful of places where you can beat the current rate. Here are my picks of inflation-beating instant-access accounts for your cash savings.

Here’s my video round-up from the start of August 2020

Earn 2.75% interest 

These accounts are all Regular Savings. You can only open these accounts if you have or open a current account with these banks – but that’s no reason to put you off.

Regular or monthly savers work differently to normal saving accounts. For a start, there’s a limit to how much you can save each month, and the interest is calculated on the balance each month. After 12 months the interest is paid and your saver closed. But you can then open up another and begin again.

These are ideal if you only have a certain amount of money to put aside each month, or to move money every month from a lower-paying easy access account.

First Direct (Regular Saver) – 2.75%

This is my top pick as it allows monthly deposits of up to £300. Pay in the full amount over a year and you’ll make £53.40 in interest.

HSBC (Regular Saver) – 2.75%

The monthly maximum with HSBC is a slightly lower £250 a month, meaning you can put aside £3,000 over a year and earn up to £44.50 in interest. 

Marks & Spencer Bank (Monthly Saver) – 2.75%

This is the third regular savings account. You’ll be able to save a maximum of £250 a month.

Earn 2% interest 

All of these accounts can be opened by anyone, you don’t need to be an existing customer. Two options are a current account so you can save more upfront at this rate, the other is another regular saver at a slightly lower rate.

Nationwide FlexDirect (current account)

This is the highest paying account, and you can access your money at any time. However the amount of money you can save in it is limited.

You can get 2% for one year on a balance up to £1,500 with the FlexDirect account. You do need to pay in £1,000 a month to get this rate.

Afterward the first year it will drop to 0.25%, but you can always switch away when that happens (and hopefully get a nice cash bonus for doing so).

You’re able to get the 2% on both a solo account and a joint account, so it’s worth opening a joint account too if you’re in a relationship (though watch this video first).

Virgin Money (current account)

This relatively new account from Virgin Money will pay 2.02% on up to £1,000. So though it’s a fraction better than Nationwide, I’ve put it second as you can save less there.

Earn 1.85% interest

Coventry Building Society (Regular Saver) – 1.85%

Just a touch under 2% is this regular saver from Coventry Building Society. The rate is variable so it can change at any time. You can however pay in a much larger £500 a month. 

Earn 1.5% interest and under

If you’ve maxed out the above accounts then these are your next best options.

TSB Classic Plus (current account) – 1.5%

The TSB Classic Plus offers interest on far a lower balance – you get the 1.5% on just £1,500 – but there’s still the potential to get three of these accounts if you and your partner have one each and open a joint account. You need to pay £500 into the account every month to get the interest. The rate is variable.

Lloyds Bank (Monthly Saver) – 1.5%

Sadly this account has dropped from 2.5% to 1.5%. You must have a Club Lloyds bank account (which comes with a free magazine subscription) to open this monthly saver. You can pay in a max of £400 a month and get interest to your account after a year.

If you have a standard Lloyds account the monthly saver rate is a lower 1% and there’s a limit of £250 a month.

Halifax Reward (current account) – 1.2% (equivalent)

The Halifax Reward account changed in June. Existing customers need to opt-in, but if you do it’s possible to get £5 a month as a “reward”. There are two ways to get this.

One is spending £500 on your debit card (though other cashback credit cards can beat this), or you can get if there is £5,000 in your account every day of the month.

If you do this every day of the year, you’ll get £60, which though it’s not interest, is the equivalent of 1.2%.

However, have less in the account for just one day of a month and you get nothing. And £5k is a lot of money for most people, especially as you can get better rates at Nationwide and TSB first.

So it’s better to use the debit card option and see it as cashback rather than a savings option.

Here’s my rundown of how this new Rewards account will work.

Earn 1.16% interest

The above accounts all have caps on how much you can save. You’d need £4,500 to max out the Nationwide, TSB and Virgin accounts, and potentially another £5,000 for Halifax. Then it’s a case of pushing the money into the higher paying regular savers.

But what should you do with any additional money? You can still beat most standard savings or current accounts where you’re likely to get less than the base rate of 0.1%. You can currently get 1.16% (more below).

You can also fix your savings for a year or longer and get a slightly better rate in return. However, you need to be sure you won’t need access to that cash over that time. The longer you fix, the greater the risk you’ll lose out if rates were to rise. But at the same time, they’re protected if rates were to continue to fall.

NS&I Income Bond (easy access) – 1.16%

The best rate right now is actually an easy-access account from NS&I. This Government-backed bond will pay 1.16% with a minimum investment of £500, though that’s also the minimum withdrawal amount and minimum balance. You’ve also got protection above the standard FCSC level of £85,000 as it covers balances of up to £1 million.

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