The Bank of England's base rate has risen to its highest point in 14 years, which is good news for savers looking for the best savings accounts the UK. The Bank of England recently raised rates for the tenth time in a row in a bid to curb inflation and our article 'When will interest rates rise (or in fact be cut)?' provides insight into why interest rates are on the rise as well as our latest predictions on what is likely to happen to interest rates in 2023. Alternatively, you can watch Damien's latest interest rate rise video.
In this article, we explain the different types of savings accounts, things you should consider before opening a savings account and the best savings accounts for your cash. You can jump to the best savings accounts via the following links:
- Best Regular Savings account
- Best High Interest Savings account
- Best Fixed Rate Bond Savings account
- Best Easy Access account
- Best Children’s Savings account
- Best Notice account
- Best Junior Cash ISA
- Best Cash Lifetime ISA
- Best Fixed Rate Cash ISA
- Best Variable Rate ISA
- Best Business Fixed Rate bond
- Best Business Notice account
- Best Business Easy Access account
What is a savings account?
A savings account provides a safe place for you to deposit your money, away from your usual everyday spending. You can earn interest on money held in a savings account and depending on the type of account you have, you should be able to access your money relatively easily. Savings accounts can be a good way to save money for a rainy day or for short-term savings goals such as a holiday, whereas ISAs can be a better option for saving money over a longer period of time. There is no limit to the amount of savings accounts you can open but if you open an ISA there is a limit to how much you can contribute each year and how many of your accounts you can pay into. Check out our article 'Can I invest into more than one ISA?' for more information.
When you pay money into a savings account with a UK-authorised bank or building society you will have FSCS provides protection for your savings up to £85,000. This amount is usually shared between banking licences, however, so you need to ensure that you are covered if you have more than one account with a bank that shares the same licence e.g HSBC and First Direct. For more information on the FSCS and how it works, read our article 'What is the Financial Services Compensation Scheme (FSCS)?'
What are the different types of savings accounts?
There are numerous savings accounts to choose from and so it is wise to do your research and work out which type of savings account works best for you. We briefly explain each type of saving account below but more information can be found in our article, 'What are the different types of savings accounts?'
Savings account types:
- Current account savings - Most current bank accounts come with an integrated regular savings account which allows you to easily transfer money from one account to another and some of these come with high introductory interest rates.
- Regular Savings account - A regular savings account requires you to commit to paying a regular sum each month but this usually means you will benefit from a better interest rate.
- Fixed Rate bonds - A fixed-rate bond allows you to lock your money away for a set period of time at a fixed savings rate.
- Easy Access account - An easy access savings account holds your money in a separate savings account but you can access your money as and when you need it. As a result, the interest rates tend to be lower than some other savings accounts.
- Notice accounts - A notice savings account usually offers a slightly better interest rate than easy access accounts but your money is not accessible for a period of time.
- Children’s savings accounts - A children's savings account is specifically designed for children's savings and usually come in the form of easy access or notice accounts.
- Business savings account - You can get a variety of business savings accounts including easy access, notice and fixed-rate bond accounts specifically for your business savings.
- ISAs - If you have a large sum of cash to save you may wish to consider an ISA as there are additional tax benefits. You can choose between variable rate and fixed rate cash ISAs, stocks and shares ISAs, Junior ISAs and Lifetime ISAs.
Savings accounts vs ISAs
If you are looking to save some money you may be wondering about the differences between savings accounts and cash ISAs. One of the key differences is the interest and returns on an ISA are tax-free. You can currently deposit up to £20,000 per tax year into a Cash or Stocks and Shares ISA. There is a £9,000 per tax year limit for a Junior ISA and £4,000 per tax year limit for a Lifetime ISA.
With regular savings accounts, you will be taxed once you earn over £1,000 in interest - also known as the personal savings allowance. Therefore, if you have large sums of cash to save you may wish to consider an ISA (Individual Savings Account). For a more detailed explanation of the difference between a cash ISA and a savings account, visit our article 'What is the difference between a Cash ISA and a savings account?'.
Best savings accounts in the UK
In this section of the article, we list the best rates for each savings account type. If you want to compare the best deals and latest savings rates, click on the best buy of each section or visit our website where you can view all of our savings best buys.
Best Regular savings account - First Direct
Below we list the best Regular Savings account. Alternatively, you can compare all of the best Regular Savings accounts in our best buy table.
| First Direct | |
| Account name | Regular Saver Account |
| AER | 7.00% |
| Minimum opening balance | £25 |
| Minimum required per month | £25 |
| Maximum allowed per month | £300 |
| How to manage the account | Mobile Banking, Online, Telephone |
| How to apply | Mobile, Online |
| Summary |
Only available to holders of First Direct 1st Account. Unused allowance can be carried over each month up to £300. Interest paid when matured. Access on closure only. After 12 months account reverts to Savings Account or Everyday e-Saver account and the rate will change accordingly. |
| Financial Services Compensation Scheme | Shared Licence (HSBC) |
(Source: savingschampion.co.uk Updated: 02/06/2023)
Best High Interest current account - Nationwide Building Society
Below we list the best High Interest Current accounts. Alternatively, you can compare all of the best High Interest Current accounts in our best buy table.
| Nationwide Building Society | |
| Account name | FlexDirect Account |
| AER | 5.00% |
| Minimum opening balance | £0 |
| How to manage the account | Branch, Cash Card, Mobile Banking, Online, Telephone |
| How to apply | Branch, Online |
| Summary | Interest rate reverts to 0.25% after 12 months. Rate reverts to 0.25% if a minimum of £1,000 is not deposited each month during the first year. Interest is only paid on balances up to £1,500. |
| Financial Services Compensation Scheme | Own Licence |
(Source: savingschampion.co.uk Updated: 02/06/2023)
Best Fixed Rate Bond account - Raisin
Below we list the best Fixed Rate Bond account. Alternatively, you can compare all of the best Fixed Rate bond accounts in our best buy table.
| Raisin | |
| Account Name | 1 Year Fixed Term Deposit Provided by National Bank of Egypt UK Ltd |
| AER |
5.25% |
| Minimum opening balance | £10,000 |
| How to manage the account |
Online |
| How to apply | Online |
| Financial services compensation scheme | Own Licence |
(Source: savingschampion.co.uk Updated: 02/06/2023)
Best Easy Access account - Hanley Economic Building Society
Below we list the best Easy Access savings account. Alternatively, you can compare all of the best Easy Access accounts in our best buy table.
| Hanley Economic Building Society | |
| Account name | Branch Saver |
| AER | 4.50% |
| Gross Interest Rate | 4.50% |
| Minimum opening balance | £1,000 |
| How to manage the account | Branch, Post |
| How to apply | Branch, Post |
| Financial Services Compensation Scheme | Own Licence |
(Source: savingschampion.co.uk Updated: 02/06/2023)
Best Children’s Savings account - Halifax
Below we list the best Children's Savings account. Alternatively, you can compare all of the best Children's Savings accounts in our best buy table.
| Halifax | |
| Account name | Kids' Monthly Saver |
| AER | 5.50% |
| Minimum opening balance | £10 |
| Maximum age to open | 15 |
| Minimum age to open | 0 |
| How to manage the account | Branch |
| How to apply | Branch, Online |
| Financial Services Compensation Scheme | Shared Licence (Bank of Scotland) |
(Source: savingschampion.co.uk Updated: 02/06/2023)
Best Notice account - HTB
Below we list the best Notice account. Alternatively, you can compare all of the best Notice accounts in our best buy table.
| HTB | ||
| Account name | 120 Day Notice Account - Issue 7 | |
| AER | 4.40% | |
| Notice period | 120 days | |
| Minimum opening balance | £1 | |
| How to manage the account | Online, Post, Telephone | |
| How to apply |
Online |
|
| Financial Services Compensation Scheme | Own Licence |
(Source: savingschampion.co.uk Updated: 02/06/2023)
Best Junior Cash ISA - Bath Building Society
Below we list the best Junior Cash ISA. Alternatively, you can compare all of the best Junior Cash ISAs in our best buy table.
| Bath Building Society | |
| Account name | Junior Cash ISA Issue 1 |
| AER | 5.10% |
| Minimum opening balance | £1 |
| How to manage the account | Branch, Post |
| How to apply | Branch, Post |
| Summary | No access until the child is 18. Interest paid annually on 31st December. Available to new customers living, working or studying in Bath or whose parent, grandparent or legal guardian has held a mortgage or savings account for the last 12 months at least. |
| Financial Services Compensation Scheme | Own Licence |
(Source: savingschampion.co.uk Updated: 02/06/2023)
Best Cash Lifetime ISA - Moneybox
Below we list the best Cash Lifetime ISA. Alternatively, you can compare all of the best Cash Lifetime ISAs in our best buy table.
| Moneybox | |
| Account name | Cash Lifetime ISA |
| AER | 3.50% |
| Minimum opening balance | £1 |
| How to manage the account |
Mobile Banking |
| How to apply |
Mobile |
| Account summary |
25% government bonus is paid monthly if a deposit has been made that month. Access is subject to a 25% withdrawal charge unless it is after the age of 60 or for the purchase of a first home. Interest is paid annually. Rate includes a 0.75% bonus for the first 12 months. |
| Financial Services Compensation Scheme | Own Licence |
(Source: savingschampion.co.uk Updated: 02/06/2023)
Best Fixed Rate Cash ISA - Castle Trust Bank
Below we list the best Fixed Rate Cash ISA. Alternatively, you can compare all of the best Fixed Rate ISAs in our best buy table.
| Castle Trust Bank | |
| Account name | 1 Year Fixed Rate e-Cash ISA |
| AER | 4.51% |
| Minimum opening balance | £1,000 |
| How to manage the account | Online |
| How to apply | Online |
| Accepts cash ISA transfers in? | Yes |
| Accepts stocks & shares ISA transfers in? | No |
| Financial Services Compensation Scheme | Own Licence |
(Source: savingschampion.co.uk Updated: 02/06/2023)
Best Variable Rate Cash ISA - Virgin Money
Below we list the best Variable Rate ISA. Alternatively, you can compare all of the best Variable Rate ISAs in our best buy table.
| Virgin Money | |
| Account name | Easy Access Cash ISA Exclusive Issue 2 |
| AER | 3.75% |
| Minimum opening balance | £0 |
| How to manage the account | Branch, Mobile Banking, Online, Post, Telephone |
| How to apply | Branch, Online |
| Accepts cash ISA transfers in? | Yes |
| Accepts stocks & shares ISA transfers in? | Yes |
| Financial Services Compensation Scheme | Own Licence |
(Source: savingschampion.co.uk Updated: 02/06/2023)
Best Business Fixed Rate Bond - United Trust Bank
Below we list the best Business Fixed Rate Bond savings account. Alternatively, you can compare all of the best Fixed Rate Bond accounts in our best buy table.
| United Trust Bank | |
| Account name | Business 3 Year Bond |
| Term | 3 years |
| Interest rate | 4.35% |
| Minimum opening balance | £5,000 |
| How to manage the account | Post, Telephone, Email |
| How to apply | Post, Online |
| Summary | No access within the term. Interest paid annually on maturity to the savings account. |
| FSCS | Own Licence |
(Source: savingschampion.co.uk Updated: 02/06/2023)
Best Business Notice account - United Trust Bank
Below we list the best Business Notice savings account. Alternatively, you can compare all of the best Business Notice accounts in our best buy table.
| United Trust Bank | |
| Account name | 120 Day Notice Tracker |
| Interest rate | 4.50% |
| Notice Period | 120 days |
| Minimum opening balance | £5,000 |
| How to manage the account | Online, Post |
| How to apply | Online, Post |
| FSCS | Own Licence |
(Source: savingschampion.co.uk Updated: 02/06/2023)
Best Business Easy Access account - Kent Reliance
Below we list the best Business Easy Access savings account. Alternatively, you can compare all of the best Business Easy Access saving accounts in our best buy table.
| Kent Reliance | |
| Account name | Business savings account - issue 7 |
| Interest rate | 3.00% |
| Minimum opening balance | £1 |
| How to manage the account | Online |
| How to apply | Online |
| Summary | Easy access. Interest is paid on the 5th of April each year or on the last working day of the month |
| FSCS | Own Licence |
(Source: savingschampion.co.uk Updated: 02/06/2023)
What to consider before opening a new savings account
Before opening a savings account there are a few things that you should consider to ensure you are maximising the returns on your money. We list some things to consider before choosing a savings account below:
Consider your savings goal
Have you decided what you are saving for or are you just squirrelling away money for a rainy day? Choosing a savings goal can help you to decide which account to open, especially if you are going to need access to your money easily.
Do you have to pay tax on your savings?
There is a personal savings allowance of £1,000 on a savings account. This means you do not need to pay any tax on savings interest until you earn over £1,000 in interest each year. We explain more in our article, 'What is the personal savings allowance?' If you save your money in a cash ISA it is tax-free. Find out more about the differences between savings accounts and ISAs in our video.
How much money are you saving?
If you have a large sum of cash which you are planning to save over a longer period of time you may wish to consider an ISA as there is no tax payable on interest or returns. There is an annual ISA limit which is currently £20,000 for the current 2023/24 tax year.
Do you need access to your money?
When opening a savings account you need to consider if you are going to need access to your money in the near future. Usually, the accounts with higher interest rates have restrictions on when you can access your cash so if you are likely to require access to your money you should consider an easy access account.
Are there any perks?
Once you have decided on the type of savings account you wish to open you could compare the accounts to see if there are any perks for opening an account. Some providers may have additional benefits such as introductory interest rates or insurance policies as a perk.
Look for the best interest rate
The higher the interest rate on your savings account, the better your returns will be. Accounts with higher interest rates do however usually have more restrictions when it comes to accessing your money, so look out for these.
Look out for any limits or restrictions
Some savings accounts may have limits or minimum requirements on the amount of money that can be deposited into the account each month, or you may have to deposit a minimum amount to open the account, which can be a fairly large sum in some cases.
How to boost your savings
It is always good to try and boost your savings to ensure you are always making the most of your money. We share some easy ways you can boost your savings.
Regularly review your savings account
It is a good idea to regularly review your savings account to see if it is still the best place for your money as your circumstances may have changed or there may be new rates on offer that you are missing out on.
Use a cash savings platform
Signing up for a cash savings platform allows you to move your money between multiple bank accounts without having to open a new account each time. This allows you to easily benefit from new and changing interest rates with just a click of a button. One thing to consider is that savings platforms are not always whole of market and so you could miss out on a better deal elsewhere. For more information on savings platforms, read our article 'Best savings platforms in the UK'.
Save as you spend
You can boost your savings by saving as you spend with a savings app. These apps round up your spare change while you spend helping you to save with very little effort. Although this will only be small amounts each time you save you can often boost the savings by multiplying the round-ups or depositing them directly into a savings account. Learn more in our article, 'Best savings apps in the UK'.
Earn up to £6,000 in interest without paying any tax
If you are a low earner it is possible to earn up to £6,000 in interest without paying any tax. The savings rate allowance was introduced in 2015 to ensure that low earners pay less tax on their savings. We explain more in our article, 'What is the personal savings allowance (and how you can boost it by £5,000)'.
