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, every day we update our best buy list of the top paying accounts for your money
And every month I share an update article and video, taking you through the latest news and rate changes.
But 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.
How much do you need in savings?
Before we get started, it’s worth talking about what you actually need in savings.
Broadly we should all aim to have enough to cover three to six months of essential spending, though I think those with irregular income could do with topping it up further. This is your emergency fund, which at least some of it needs to be in an easy access account (you could consider notice accounts for part of it).
And on top of this you’ll want the money for your spending and saving goals. Whether that’s building up a pot to buy a new phone or pay for your holiday, to longer term and more expensive purchases like your first home or a wedding.
So tot up what you’ll need, and then above this it’s generally better off thinking long term, whether that’s being put towards your pension, adding to investments or to overpay your mortgage.
Yes there are still some decent fixed rate bonds to consider, but we’ll focus in this article on the money you might need to access.
Account 1: an easy access account
The first option is one which doesn’t restrict you from getting hold of your cash. Ideally you want this to not only be separate to your main current account, but also paying the best possible rate of interest out there.
Winner: Santander Edge Saver
| Rate: | 7% AER variable (including 2.5% bonus for one year) |
| Min: | £1 |
| Max: | £4,000 |
| Notes | £3 a month in required Santander Edge current account (though should be cancelled out by cashback on bills) |
| What you’ll earn: | Up to £280 (based on a £4,000 balance) |
This account is head and shoulders above any other easy access account when it comes to the rate available – but it comes with a few catches.
Primarily is that to get it you need to have the Santander Edge current account, and that has a £3 monthly fee which will eat into your interest earned. You also need to have two direct debits and pay in £500 every month.
However I don’t see this as something to be overly worried about. As long as you have at least £2,000 saved in the the Edge Saver you’ll match the best rates available elsewhere (5.2%).
And even that reduction is unlikely to happen as the current account also pays cashback on bills. This adds more than enough to cover the fee (though if you have the Santander 123 or 123 Lite account I’d stick with that instead).
Another issue is the cap of £4,000 that will count towards interest. Though for most people that’s more than enough, some will still need another account. There is a work around if you’re a couple as you can open up two individual Edge Savers and two joint Edge Savers (via one joint Edge current account), meaning you can get £16,000 saved – as I detail in my review, even with three lots of the fee you’ll still get the equivalent of 6.34% on that maximum deposit.
However, this is only going to be an account for one year. After 12 months the rate will drop by 2.5% (though since it’s variable it could drop more).
Despite all this, if you want to get the most interest on a lump sum and still have access to your cash, this is the best bet.
Top alternatives:
As good as the Santander Edge Saver sounds, those hoops could well put you off! Or you might have more than £4,000 you want to save. In which case, you’re best looking at the following as well or instead of:
Easy Access
- Metro Bank (5.22% AER variable includes 3.46% bonus for one year): min £500 / max £2m
- Ulster Bank (5.2% AER variable): min £5,000 / max £1m (part of Natwest/RBS)
- Cahoot Sunny Day Saver (5.2% AER variable for 12 months): min £1 / max £3,000 (part of Santander)
- Cahoot Simple Saver (5.12% AER variable): min £1 / max £2m (part of Santander)
- Barclays Blue Rewards Rainy Day Saver (5.12% AER variable): min £0 / max £5,000
- Requires current account with added Blue Rewards (£5 monthly fee but can be wiped out by meeting requirements)
- Leeds Building Society (5.1% AER variable): min £1,000 / max £1m
Notice:
Account 2: for your new savings each month
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. Just watch out for restrictions like when you can access your money.
There are quite a few options, though these are my top two.
Winner: Nationwide Flex regular saver
| Rate: | 8% AER variable |
| Min: | £1 a month |
| Max: | £200 a month |
| Notes: | Max three withdrawals a year Requires a current account |
| What you’ll earn: | £103 (based on £200 added each month) |
If you’re after the highest possible rate on a regular saver, the this one from Nationwide is unbeatable. You can even take money out up to three times a year – not always the case with regular savers.
However the rate is variable, so it could drop. Plus the £200 max you can pay in each month is lower than some of the other options.
Runner up: First Direct Regular Saver
| Rate: | 7% AER fixed |
| Min: | £25 a month |
| Max: | £300 a month |
| Notes: | No withdrawals Requires a current account |
| What you’ll earn: | £135 (based on £300 added each month) |
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.
A big plus is that the rate is fixed for a year so if rates fall you won’t see any drop (though you’ll miss out on any increase, but that’s unlikely this year).
You won’t be able to withdraw any money from this account within that year without the whole account closing and forfeiting the interest.
Alternatives
There are others that pay 6% or more, and there’s a mix of variable and fixed rate accounts. Though some also require a current account to open the monthly saver, some don’t – which could be a reason to go for them.
- Gatehouse Bank Regular Saver (7% expected profit rate variable) – min £1 / max £300 per month
- Club Lloyds Monthly Saver (6.25% AER fixed) – min £25 / max £400 a month (requires Club Lloyds current account) – full review
- Natwest Digital Regular Saver (6.17% AER variable) – min £1 / max £150 a month (requires current account) – full review
- RBS Digital Regular Saver (6.17% AER variable) – min £1 / max £150 a month (requires current account)
- TSB Monthly Saver (6% AER fixed) – min £50 / max £250 a month (requires TSB current account)
- Principality Building Society (6% AER fixed) – min 0 / max £50 per month
The best monthly savings accounts
Check out my list of the highest paying regular or monthly savings accounts.
Account 3: to minimise tax on savings interest
If you’ve built up a half decent stash in savings, then the high rates we’re seeing right now mean a balance of £20,000 at 5% could use up the £1,000 Personal Savings Allowance, and half that for those who are higher rate tax payers.
So what do you do with the extra money? Right now it pays to move it to a tax-free account. You can put £20,000 in to a Cash ISA (though bear in mind that annual allowance is shared across all ISAs, so you might be better off using it for investments). Or you can put money in Premium Bonds.
Winner: Zopa Smart ISA
| Rate: | 5.08% AER variable (easy access) |
| Min: | £1 |
| Max: | £20,000 a year |
| Notes: | Flexible |
| What you’ll earn: | £254 (based on £5,000) |
The 5.08% on offer from this ISA beats paying some tax on some interest in most other options. You can even split cash into pots.
Runner Up: Premium Bonds
| Rate: | 4.65% Prize Rate |
| Min: | £25 |
| Max: | £50,000 |
| Notes: | Flexible |
| What you’ll earn: | It’s all down to luck! |
Premium Bonds are best avoided if you’ve not used your PSA or ISA allowances. But if you have, especially anyone who’s a 45% rate taxpayer, then Premium Bonds are worth a look as all the winnings are tax free.
But despite the prize rate sitting at 4.65%, it doesn’t mean you’ll get that return. In fact, the lower your balance, the higher the chance that you’ll win nothing at all!
However, the more you have saved, the more chances you have to win, and the more likely you’ll get prizes approaching the rate. Here’s my full guide to how Premium Bonds work.
Alternatives:
- Easy access – Leeds Building Society (5.05% AER variable)
- One year – Virgin Money (5.25% AER fixed) – requires a current account
- One year – Shawbrook Bank (5.01% AER fixed)
- Two year – Post Office Money (4.9% AER fixed)
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Account 4: for first time home buyers
A quick extra one to throw in as it’s vital for anyone who is yet to buy a home – as long as they’re under 40 years old.
A Lifetime ISA will give you a 25% bonus on the money you add, with a limit of £4,000 you can deposit each year. That money can either go towards your first home or retirement. There’s plenty more you’ll need to read about these before opening one up, so check out our Lifetime ISAs explained article for more.
Winner: Moneybox LISA
| Rate: | 4.25% AER variable (easy access) |
| Min: | £1 |
| Max: | £4,000 a year |
| Notes: | Drops to 3.5% after a year |
| What you’ll earn: | £212.50 (based on £4,000 deposit and 25% bonus before interest) |
Open this up with a least a pound as you can’t use it until a year has passed.
The exclusive rate offered by Metro has dropped to 4.51%. I opened the account whilst the 5.22% was advertised (shows 5.10% in app), is this going to drop soon and I should look into moving the funds already having only had it for a month? Thanks
Andy,
Regarding your #1 easy access account (Santander Edge Saver) could you simply close the account after the 12 months and then open a new one, thereby retaining the higher rate?
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