Here are my top places to put your cash to make as much as 3%.

We’re a long way now from when we could get 5%, with rates slowly dropping over the last few years. And following the Bank of England base interest rate cut to an all-time low of 0.1%. those cuts have happened even faster. Accounts can disappear days after becoming available, and rates continue to fall.

You want to make sure you’re getting the best rate on your savings, and this article will take you through the best options right now.

You also want also to ensure you earn more than inflation. This really is key as anything below that rate is losing value in real terms,

The latest inflation rate (for November 2020) was 0.3% which means it’s possible to get accounts that beat it. But if you look at this chart you’ll see the current climate makes it very unpredictable.

source: tradingeconomics.com

(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 usually in the middle of the month.)

My top three savings accounts for 2021

To keep things simple and get the best rate for emergency cash funds, check out my article listing the three accounts to cover your savings. Or watch the video below.

Here’s my monthly video round-up from mid-January 2021

Best Regular Savings accounts – up to 3.04%

These accounts are all Regular or monthly savers which 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. Here’s my full guide to how they work.

You can only open the top accounts if you have or open a current account with these banks – but that’s no reason to put you off.

Sadly the market leading accounts from First Direct, HSBC and M&S Bank all cut rates for new customers to 1% in late November 2020.

Natwest / RBS (Regular saver) – 3.04%

This account offers a massive rate but with a few restrictions. The biggest is you can only save £50 every month. Not far behind is that interest will only be paid on the first £1,000 saved.

It’s only open to Natwest or RBS customers. Here’s my review of the account and more information on how it works.

Lloyds Bank (Monthly Saver) – 1.5%

This monthly saver will pay 1.5% fixed for a year. You can pay in a max of £400 a month and you will get the interest paid to your account after the 12 months when it closes..

You must have a Club Lloyds bank account (which comes with a freebies such as a magazine subscription or cinema tickets) to open. More on this account below.

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

Coventry Building Society (Regular Saver) – 1.3%

This regular saver from Coventry Building Society doesn’t require a current account so anyone can open it. The rate is variable so it can change at any time. You can however pay in a decent £500 a month. 

Best high-interest current accounts

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 lower rate.

Nationwide FlexDirect (current account) – 2%

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.

After 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) – 2.02%

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.

You can also get a linked 0.5% savings account

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 Rewards account will work.

Club Lloyds (current account) – 0.78% (equivalent)

This current account has suddenly become a lot more appealing for savings. As long as you have two direct debits going out, you’ll get 0.6% on balances up to £3,999 and then 1.5% between £4,000 and £5,000. So that’s the equivalent to 0.78% if you have the full £5.000 saved.

You also get access to the above mentioned 1.5% regular saver, and there are freebies with the account such as monthly movie rentals or a magazine subscription. Make sure you pay in £1,500 a month to avoid a £3 monthly fee.

Best app based savings – up to 1.25%

Chip +1 (Savings app) – 1.25%

This is an easy-access account but with a few differences. For a start you’ll only earn the interest on the first £5,000 and you won’t earn compound interest.

Plus there’s a fee on top if you want to save between £2,000 and £5,000, which reduces then rate you’ll earn in real terms. If you have the full £5,000 saved it works out as 0.89%.

But all in it’s a decent bet if you’ve used the above. Here’s my full review, including a VIP invite code you’ll need to access the account.

Best fixed savings accounts – up to 0.8%

The above accounts all have caps on how much you can save. You’d need £2,500 to max out the Nationwide, and Virgin accounts. 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 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.

The best accounts are dropping or closing daily (even hourly) at the moment.

QIB (one year fix) – 0.8%

The expected return on this Sharia account is 0.8% with QIB, and if you deposit at least £5,000 via Raisin you’ll get a bonus of up to £15.

Shawbrook(One year Fixed account) – 0.65%

This one year fix from Shawbrook pays 0.65%. Minimum deposit is £1,000.

Best easy access savings accounts – up to 0.5%

Rates are incredibly poor for these accounts and getting worse!

Virgin Money – 0.5%

This is the linked easy-access account mentioned above when you open up a Virgin Money current account.

Best ethical savings account

The money you hold in your savings is used by the banks to invest and lend money. This could mean it’s used for things you might disagree with, such as fracking, tobacco or arms manufacturing.

There are banks with ethical policies such as Triodos, while building societies must lend 75% of their funds to home buyers, meaning they don’t have the cash to invest elsewhere. Sharia accounts can’t be used for things against Islamic law, like tobacco or gambling.

Nationwide FlexDirect – 2%

This current account gives 2% on up to £1,500. It’s fixed for one year. Read more about this above.

QIB (one year fix) – 0.8%

The expected return is 0.8% with QIB, and if you deposit at least £5,000 via Raisin you’ll get a bonus of up to £15.

Best Sharia accounts – up to 0.8%

Paying interest isn’t allowed in Islam, so a Sharia-compliant savings account instead promises a return on the money saved – an expected profit rate. Though technically this means the rate isn’t guaranteed, it’s not happened yet. They’re open to everyone, not just Muslims.

QIB (one year fix) – 0.8%

The expected return is 0.8% with QIB, and if you deposit at least £5,000 via Raisin you’ll get a bonus of up to £15.

Al Rayan Bank (one year fix) – 0.65%

The return on this one year fix will be 0.65%. There’s a minimum deposit of £5,000.

Finding the latest savings rates

I’ll update this page regularly (check the published date to see when it last happened), but if you find a rate has been cut or isn’t available, you can check the Savers Friend website.

Check out all the latest banking deals:

The best bank switching, cashback, interest & overdraft offers (January 2021)

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