Banking • Savings

Best Savings Accounts

4 months ago
594 Views
7 Min Read

With household bills soaring, inflation still high, and everyday essentials becoming more expensive, finding ways to make your money work harder has never been more important. However, the savings landscape is evolving rapidly, with some banks recently cutting interest rates on over 200 accounts, leaving many loyal customers disappointed. Despite this, there are still opportunities for savers to benefit from competitive rates, especially with challenger banks offering up to 8% returns. A good savings account can help you grow your funds while providing security and flexibility, but shopping around for the best deals is more important than ever. In this guide, we’ve rounded up the best savings accounts available, whether you need easy access to your money or higher returns by locking it away. Start saving smarter and get the most out of your hard-earned cash!

Top-Choice Savings Accounts

Easy-Access Savings: They allow withdrawals

Fixed-Terms Savings: Your money’s tied-down

What is a savings account?

A savings account is a type of bank or building society account designed to help you save money while earning interest on your deposits. The best savings accounts offer a secure and reliable way to store your funds while growing them over time, making them ideal for those saving towards specific goals, building an emergency fund, or simply seeking a return on their money.

Savings accounts come in various forms, including easy-access accounts, which allow you to withdraw funds whenever needed, and fixed-rate accounts, which offer higher interest rates in return for locking your money away for a set period. Some of the best savings accounts, like ISAs (Individual Savings Accounts), provide tax-free interest, making them particularly attractive to savers looking to maximise their returns.

These accounts are typically low-risk, with most UK-regulated banks and building societies offering FSCS (Financial Services Compensation Scheme) protection for deposits up to £85,000 per financial institution. This ensures your money remains safe, even in the event of financial difficulties at your bank.

Whether you’re saving for a short-term goal like a holiday or a long-term target like a house deposit, the best savings accounts offer a structured, secure, and interest-earning way to achieve your financial ambitions.

Things You Should Know About Savings Accounts

1. FSCS Protection: Your savings are protected up to £85,000 per financial institution by the Financial Services Compensation Scheme (FSCS). If you hold more than this amount, consider spreading your savings across multiple banks.

2. Inflation Impact: Interest rates on savings accounts may not keep up with inflation, meaning the purchasing power of your money could decrease over time.

3. Fixed-Rate Restrictions: Fixed-rate savings accounts often lock your money away for the agreed term. Early withdrawals may incur penalties or not be allowed at all.

4. Easy-Access Limits: Some easy-access accounts limit the number of withdrawals you can make each year. Exceeding this limit could reduce your interest rate or result in fees.

5. Promotional Rates: Be cautious with introductory or bonus interest rates, as they often revert to a lower standard rate after a set period.

6. Minimum Deposits: Many accounts have a minimum deposit requirement to open an account or qualify for a higher interest rate.

7. Tax on Interest: Interest earned above your Personal Savings Allowance (PSA) is taxable. Basic-rate taxpayers can earn £1,000 tax-free, higher-rate taxpayers £500, and additional-rate taxpayers have no allowance.

8. Rate Changes: Easy-access accounts often have variable rates, which means your interest rate could decrease over time. Fixed-rate accounts guarantee the same rate for the agreed term.

9. Comparison Matters: Always compare accounts from different providers to find the best deal, considering both interest rates and account terms.

10. Ethical Considerations: If you’re interested in how your money is used, look for ethical or green savings accounts that align with your values.

This section can be placed at the end of the post or as a sidebar for quick reference. It helps readers feel informed and confident about the potential risks and benefits of savings accounts.

Top Savings Accounts

Choosing the right savings account can significantly affect how quickly your money grows, especially in a market where average easy-access rates have dipped to 2.96%, down from 3.19% last year. While some major banks have reduced rates, there are still excellent deals, particularly with challenger banks offering competitive terms. Below, we’ve rounded up the best savings accounts to suit different needs:

  • Easy Access Savings Accounts: These accounts are perfect if you need the flexibility to withdraw your money whenever you want while still earning interest. Ideal for building an emergency fund or saving for short-term goals, the best savings accounts in this category offer competitive rates and hassle-free access to your funds.
  • Fixed-Term Savings Accounts: Also known as fixed-rate bonds, these accounts are outstanding for savers who can lock away their money for a set period in exchange for a higher, guaranteed interest rate. Despite recent reductions in rates, fixed-term options remain among the best savings accounts for those looking for certainty on returns, making them ideal for long-term goals where immediate access isn’t needed.

Below, we’ve highlighted the best savings accounts across both categories, including their interest rates, terms, and key features, to help you find the perfect option for your financial goals.

EASY-ACCESS SAVINGSFIXED-TERM SAVINGS
The Cooperative Regular Saver – 7%
– 7% gross / AER variable (annually)
– Interest paid after 12 months
– Opening Deposit – £1
– Min Deposit – £0
– Max Deposit – £250 per calendar month.
– Available exclusively to Co-operative Bank current account holders		Nationwide Flex Regular Saver, 6.50%
– 6.50% AER/gross a year (variable)
– After 4 withdrawals the interest rate reduces to 2.15%
– Online only account
– Open online, and save up to £200 a month for 12 months.
Natwest Digital, 6.17%
– AER/Gross p.a (variable)
– 6.17% on balances up to £5,000
– 1.60% on balances over £5,000
– Save between £1 – £150
– Apply online only in 5 minutes
– Exclusively for current account customers, aged 16 and over. UK residents only		Lloyds Club Saver, 6.25%
– 6.25% AER/gross fixed
– £25-£400 per month
– Interest is paid after a year
– Unlimited withdrawals
TSB Instant Saver, 6%
– Ideal for if you need to dip into your savings.
– Save in a way that suits your lifestyle.
– Up to 6.00% gross/AER fixed for 12 months (for a Monthly Saver)		Barclays Rainy Day Saver, 4.87%
– AER/gross p.a. variable
– 4.87% On the first £5,000 of your balance
– 1.16% On amounts over £5,000
Santander, 5.84%
– Minimum opening deposit of £1.
– Manage your account in Mobile and Online Banking.
– Online only
– 6.00% AER / 5.84% gross (variable) interest on balances up to £4,000 (includes 1.50% AER (variable) bonus rate for the first 12 months from opening)		Coventry Building Society, 4.75%
– 4.75% AER/Gross p.a. (Variable)
– Interest paid annually
– £1-£500 paid in each month
Lloyds Monthly Saver, 5.25%
– 5.25% AER/gross fixed.
– Interest is paid after a year.
– £25-£250 per month

Savings Interest Calculator

Want to know how much your savings could grow over time? Use our Savings Interest Calculator to estimate your potential returns based on your deposit amount, interest rate, and investment duration.

How It Works:

  1. Enter your initial deposit – This is the amount you plan to save.
  2. Select an interest rate – Choose the rate from one of the accounts listed above or enter your own.
  3. Choose your savings duration – Enter the number of months or years you plan to keep your money invested.
  4. See your results instantly! – The calculator will show you how much interest you’ll earn and your total balance at the end of the term.
  5. Get your results to your email – enter your name and email address and we’ll send you a copy of your results.

This tool makes it easy to compare different accounts and find the best option for growing your savings.

Please enable JavaScript in your browser to complete this form.
Selected Value: 4 %
Selected Value: 10 years
Enter your name and email address to receive your calculations.

Frequently Asked Questions

A fixed-rate savings account locks your money away for a set term (e.g., one, two, or five years) in exchange for a guaranteed interest rate. Easy-access savings accounts allow you to withdraw your money whenever you need it. Still, they typically offer lower interest rates and may restrict the number of withdrawals you can make in a year.
The best account depends on your financial goals. If you have a lump sum you won’t need for a while, a fixed-rate account can offer better returns. If you need flexibility to access your money at short notice, an easy-access account may be a better choice.
Interest rates vary between providers and depend on the length of the fixed term or the features of the easy-access account. Fixed-rate accounts generally offer higher rates, with longer terms providing better returns. Easy-access accounts typically offer lower rates due to their flexibility. Always compare rates from different providers before opening an account.
Savings accounts can sometimes offer higher interest rates than ISAs, but interest earned on savings accounts above your Personal Savings Allowance (PSA) is taxable. ISAs, on the other hand, provide tax-free interest but may have lower rates. The better option depends on your savings amount and tax status. Check out our post on Best Cash ISAs.
Interest is usually calculated daily based on your account balance and paid monthly or annually. The calculation method (e.g., compound interest) may vary between banks, so check the terms for details.
Yes, most banks allow you to open multiple savings accounts. This can help you separate savings for different goals, but ensure you stay within the Financial Services Compensation Scheme (FSCS) protection limit of £85,000 per financial institution. Learn more in our post How Safe Are My Savings?.
Savings in UK-regulated banks or building societies are protected up to £85,000 per financial institution under the Financial Services Compensation Scheme (FSCS). This protection ensures that even if your bank goes out of business, your money is safe up to this limit. Visit the FSCS website for more information.
If your bank fails, the Financial Services Compensation Scheme (FSCS) will automatically reimburse you for up to £85,000 of your savings per financial institution. This process is typically completed within seven working days.
Yes, inflation can reduce the actual value of your savings. If the interest rate on your account is lower than the inflation rate, your money’s purchasing power will decrease over time. Use the Bank of England’s inflation calculator to estimate its impact.
Both types of accounts are equally safe if they are held with a UK-regulated bank or building society covered by the FSCS. The choice between them depends on your need for access versus your desire for a fixed return.
Fixed-rate account withdrawals are usually not allowed until the end of the term. If early access is permitted, it often comes with penalties, such as loss of interest.
Yes, most fixed-rate accounts impose penalties for early withdrawals. These can include a significant loss of accrued interest or, in some cases, no access to your funds until the term ends.
Funds from easy-access accounts are typically available immediately or within one working day. However, some accounts may have a limited number of withdrawals allowed per year.
Yes, most banks and building societies offer online banking or mobile apps that allow you to transfer money between accounts quickly.
Yes, savings accounts often have minimum deposit requirements ranging from £1 to £1,000 or more. Maximum deposit limits also apply, especially for promotional rates or Financial Services Compensation Scheme (FSCS) coverage.
Fixed-rate accounts lock in an interest rate for a specified term. Your money grows at this guaranteed rate, regardless of market changes, but you typically can only access it once the term ends.
Because easy-access accounts provide flexibility, they usually have lower interest rates than fixed-rate accounts, which reward you for committing your money for extended periods.
No, the interest rate on a fixed-rate account remains the same throughout the term, providing certainty about your returns.
Most banks allow you to choose whether interest is paid monthly or annually. Monthly payments can provide a steady income, while annual payments may result in slightly higher returns due to compounding.
Closing a fixed-rate account early usually incurs penalties, such as forfeiting some or all of the interest earned. In some cases, early closure may not be allowed at all.
You typically need proof of identity (e.g., passport or driving license) and proof of address (e.g., utility bill or bank statement). Some accounts may also require your National Insurance number.
Yes, you can open a savings account with any bank, regardless of where you hold your current account. Some savings accounts, however, may require you to be an existing customer.
Yes, most banks require you to open a savings account at least 18 years old. However, some accounts are designed for younger savers and can be opened by parents or guardians.
Yes, most banks offer online and mobile banking services, allowing you to conveniently manage your account, transfer funds, and view statements.
Yes, many banks offer joint savings accounts, which can be opened and managed by two or more people. These are ideal for shared savings goals.
Most savings accounts do not charge maintenance fees, but some premium accounts or accounts with special features may have associated costs.
Interest earned on savings accounts is taxable if it exceeds your Personal Savings Allowance (£1,000 for basic-rate taxpayers, £500 for higher-rate taxpayers, and £0 for additional-rate taxpayers). ISAs provide tax-free interest.
Yes, savings accounts are excellent for setting aside money for specific goals. You may even find accounts designed for particular purposes, such as Help to Buy or Lifetime ISAs for home purchases.
You can compare accounts by looking at interest rates, withdrawal terms, fees, and additional features. Use comparison websites like MoneySuperMarket or visit individual bank websites to find the best deal. Most reputable banks will also have a ‘compare our rates’ page that compares their products for easy comparison.
Yes, some banks offer promotional rates or bonuses for new customers. These rates are often temporary, so check the terms before committing.
Yes, you can switch savings accounts, but ensure you understand the terms of your existing account, especially if it’s a fixed-rate account, to avoid penalties or lost interest.
Once the fixed term ends, your money is usually transferred within one to three working days, depending on the bank’s processes.
Yes, you can transfer funds from an easy-access account at any time. Fixed-rate accounts, however, may require you to wait until the term ends.
Yes, many banks offer savings accounts designed specifically for children or young people, often with lower minimum deposits and educational resources about saving.
Yes, you can open a savings account for someone else, such as a child, using a trustee or joint account option. The account terms will specify eligibility and requirements.
Some fixed-rate accounts accept monthly deposits, but many require a lump-sum deposit at the start of the term. Check the account terms to confirm.
If interest rates rise, you won’t benefit from the increase as your rate is fixed. However, this also protects you if rates fall during the term.
Yes, some banks offer ethical or green savings accounts that invest in environmentally or socially responsible projects. These may have slightly lower interest rates but align with ethical.

About the author

View All Posts

Sean

I'm Sean, a Senior Client Service Manager with over a decade in finance. When not at work, I'm passionate about helping people achieve financial independence through my writing at Budget Dynamo. Outdoors, you'll find me cycling and running, connecting with nature and life's balance. Join me on the path to financial empowerment and a fulfilled life.

Add Comment

Click here to post a comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

In this guide