If you want to get the best interest rate on your savings, these are the accounts you need.
To help you make the most on savings, I regularly update my best buy list of the top paying accounts for your money.
Sadly it’s not always as easy as putting all your cash in a single account. If you have more than a few grand then right now the top easy-access account would give you a rate of 3%. That’s well below inflation.
To beat that 3% rate (sadly not inflation) you’ll need to split your money across more than one account. Do this and it’s possible to get higher rates.
To keep things simple, in this article I’ve broken down what I think are the best options for your cash. You could stick to just one or two, or build up a portfolio with a handful more.
You can watch this video, or keep reading to learn more.
Best accounts for easy-access cash
It’s important you have some money available to you that’s relatively easy to access in an emergency, but also earns the best interest you can.
As a rule of thumb it’s great to try to save enough to cover three to six months of essential expenses. So for this article, I’ll assume a figure of £2,000 a month, which means you’d aim for £6,000 to £12,000. The total could be more or less for your situation.
Beyond this it might be worth looking at investing, overpaying your mortgage or adding to your pension. But if you are saving for something beyond an emergency, then the runner-up accounts will cover you.
Winner: Barclays Blue Rewards Rainy Day Saver
- Interest rate: 5.12% AER variable
- Limit: Only earned on first £5,000 per account
- What you’ll earn: Up to £256 (based on a £5,000 balance)
This is the first account I’d open for your savings as it’s the highest paying at 5.12%. The rate is variable so it could change.
The Rainy Day saver is easy access with no restrictions on withdrawals. However there is a limit on how much you can earn interest on – £5,000. That means the maximum you’ll earn is £256 in a year. Any money above this will earn 0.5% so it’s better off in a different account.
However, getting the account is a little complicated – but it shouldn’t be enough to put you off.
To open it you have a Barclays current account, and then add on the Blue Rewards membership. This requires you to deposit £800 a month into your current account, though it can be withdrawn straight away. You’ll also need two direct debits in place. Do both of these and you’ll get £5 credit added to your account, which cancels out the £5 monthly fee. I’ve written about it in detail here.
Runner up: Coventry Building Society Limited Access Saver
*Update 6/1/23 – Coventry BS have withdrawn this account for new applications*
- Interest rate: 3.25% AER variable
- Limit: Only six withdrawals a year
- What you’ll earn: £227.50 (based on a £7,000 balance)
There are a handful of other current accounts paying above 4%, but they have some limitations (Santander Edge’s 4% has a monthly fee and £4,000 balance cap while the 5% at Nationwide FlexDirect is only for 12 months and only once in your lifetime).
Instead I’m going for a limited-access account from Coventry Building Society as my next pick which offers 3.25% AER (variable) on a balance of up to £250,000.
Though you can only make six withdrawals a year, if this is in addition to the Barclays account you’ll hopefully not need to access the money more than this.
Bear in mind that other limited and easy access accounts aren’t too far behind and could well surpass the rate on offer here, so keep an eye on my regular updates.
Runner up: Chip
- Interest rate: 3% AER variable
- Limit: Bonus doesn’t compound and isn’t protected by FSCS
- Max you’ll earn: £210 (based on a £7,000 balance)
An alternative to Coventry’s account is from Chip. You’ll get a slightly lower rate of 3%, but there are no restrictions on withdrawals. So it’s a handy option if you think you’ll need to get to the money more than six times a year.
However the interest isn’t interest. Instead it’s a bonus. And unlike interest on normal accounts, you won’t earn anything extra on this bonus. That won’t really make a difference over one year (the AER lets you compare like for like), but will make a difference in future years.
I’ve written a full analysis of the account here to you can decide if it’s for you.
Is it worth having multiple accounts?
Andy’s analysis
You might be thinking, this feels like too much hassle – I just want one savings account to keep things easy. Well, let’s have a look at the difference in earnings from the top accounts I listed above.
| Account | Interest on £5,000 | Interest on £10,000 | Interest on £11,000 | Interest on £12,000 |
| Barclays Blue Rewards Rainy Day Saver | £326 | £351 | £356 | £361 |
| Coventry Building Society Limited Access Saver | £162.50 | £326 | £357.50 | £390 |
| Chip Instant Access | £150 | £300 | £330 | £360 |
It’s clear that you’re better off putting your money in the Barclays account if you’ve under £5,000. And even though you’ll get a lower rate on savings above this, you’ll still make more in total on balances up to £10,000 too.
But as you get close to £11,000 the Coventry account takes earns more in total, and at £12,000 the Chip account also beats the Barclays account.
So if you have more than £11,000 you’re better off with one of those accounts if you want to stick to a single account.
But bear in mind having £5,000 in Barclays and then £6,000 in the Coventry account would earn you a total of £521 – that’s an extra £163.50 when compared to just putting it in Coventry.
And don’t forget rates can and will change, so it’s worth keeping an eye on the best rates right now in my regularly updated list.
Best account for new savings
If want to add to your savings from your salary each month then a regular or monthly saver is your best bet. Not only will you get some of the highest rates, but you’ll need to put money aside each month – helping you get into a savings habit.
There are quite a few options, though these are my top three.
Winner: First Direct Regular Saver
- Interest rate: 7% AER (variable) for 12 months
- Limit: Up to £300 a month
- Max you’ll earn: £135
The idea of a regular saver is you put money aside each month for a year, then get the interest in one go. So you can move the money the day after pay day to ensure you’re always saving.
You need to have a First Direct current account to access this account, but with up to £175 on offer for switching your bank, that feels like a no-brainer.
You won’t be able to withdraw any money from this account within that year without the whole account closing and forfeiting the interest.
Runner Up: Club Lloyds regular saver
- Interest rate: 5.25% AER (fixed) for 12 months
- Limit: Up to £400 a month
- Max you’ll earn: £135
This regular saver is open to those with a Club Lloyds current account (which comes with six free cinema tickets or a magazine subscription each year, and often has switching deals too) and though the rate is lower than with First Direct, you can pay in more each month.
This one also allows you to withdraw money throughout the year, though you’re still limited by the monthly limit for new deposits.
In addition, if you have more cash to put away you can open an additional 4.5% paying regular saver with Lloyds, with a £250 montly deposit.
Runner Up: Halifax regular saver
- Interest rate: 4.5% AER (fixed) for 12 months
- Limit: Up to £250 a month
- Max you’ll earn: £73
Though you can beat or equal this rate at a few other banks, this one doesn’t require you to have a current account with Halifax, so it’s easier to get.
Best if you’ve used your Personal Savings Allowance
If you’re a higher rate taxpayer then your Personal Savings Allowance (how much interest you can earn tax-free in a year) is reduced from £1,000 to £500, while it goes completely for additional rate payers. And it could be the higher rates we’ve seen recently push even basic rate taxpayers over their allowance.
In this instance, you’ve got a choice. Do you put money in a tax-free account, or do you pay tax on the interest earned over the allowance?
Winner: Barclays One Year Flexible Cash ISA
- Interest rate: 4% AER (fixed)
- Limits: Up to £20,000 in a financial year (£1m via transfers in) / Only three withdrawals a year up to 10% of the balance each time
The 4% on offer from this ISA beats most accounts out there. If you pay 20% tax on earnings outside your PSA you’d need to find a rate of 5% to be level, while 40% taxpayers would require 6.67%. That’s unlikely to happen.
The withdrawal restrictions mean it’s not really suitable as your main easy access account – hence why it’s not listed elsewhere in this guide. However, while it’s fixed at 4% for a year, you can still access your money three times, which is better than with other fixed accounts.
Those withdrawals are restricted to 10% of your balance at the time. So if you have £5,000 saved, you can take out £500, then £450, and then £405 – which would be a maximum of £1,345.
You do need to be a Barclays customer to get the account.
Runner Up: Premium Bonds
- Interest rate: 3% prize rate (no guarantee of winning)
- Limit: £50,000
If you have at least £5,000 more to save and you don’t want to invest it or will face tax on all interest, then I’d consider Premium Bonds.
There isn’t an interest rate on this, instead there’s a 3% chance of winning. However, since the minimum prize is £25 and the maximum prize is £1 million, it’s impossible for every £100 saved to earn £3. In fact, there’s no guarantee you’ll win any prizes at all!
But with the average rate of luck, those with at least £5,000 should just below the 3% rate, so it’s not far off the best options elsewhere, especially when you consider prizes are all tax-free.
The more you have saved, the more chances you have to win, and the more likely you’ll get prizes approaching 3%. Here’s my full guide to how Premium Bonds work.
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Best account for ethical saving
Most of the accounts I’ve listed above might pay decent rates, but they could be using your money to invest in activities you’d rather than didn’t such as arms manufacturing and fossil fuel extraction.
If you’d rather than wasn’t the case, then it makes sense to look for building society accounts as they’re generally using your money to lend on mortgages. Or there are a handful of other accounts which claim to have green credentials.
Winner: Nationwide FlexDirect
- Interest rate: 5% AER
- Limits: On balances up to £1,500 and only for 12 months
If you’ve not had a FlexDirect current account from Nationwide then you can get 5% on balances up to £1,500. Just bear in mind this lasts for just one year and you can only get it once. So if the rate of overall balance improves you’ll miss out.
Runner up: Coventry Building Society Regular Saver
- Interest rate: 4% AER variable (for 12 months)
- Limit: Up to £500 a month
- What you’ll earn: £129
There’s a higher paying regular saver from Nationwide but you’re limited to just £50 a month.
Runner up: Coventry Building Society Limited Access Saver
*Update 6/1/23 – Coventry BS has withdrawn this account for new applications*
- Interest rate: 3.25% AER variable
- Limit: Only six withdrawals a year (up to 10% of the balance each time)
- What you’ll earn: £227.50 (based on a £7,000 balance)
The same account listed above, just remember you can only take money out six times a year.
Thanks for sharing this informative post on savings accounts. I found it very useful to learn about the various options available and their interest rates. This information will definitely help me make a more informed decision on where to park my savings. Keep up the great work!
Am with virgin m plus account and savings plus account with £25000 in am I better moving my money elsewhere to earn more money thanks
Hi Andy,
I note that for the Coventry B/S Online Limited Access account you say that the maximum amount which can be withdrawn per withdrawal is up to 10% of the balance. Could you please advise where this is stated in the Coventry documentation as I am in the process of getting an account up and running and have not been able to find any restriction info. in the docs they have sent me.
Also this has proved to be the most extended time to open an account I have ever experienced, and I have opened many in my time, and I think this is due to their using two lots of post to provide, firstly an account number, and then a code after you start to log on to the account.
This is supposed to be an online account so using postal communication as well seems rather strange.
Tks
Brian