Best Savings Accounts

Your money should be working for you in a savings account.

Updated: February 23, 2024
Matt Crabtree

Written By

Matt Crabtree

|
Rachel Wait

Edited By

Rachel Wait

 

It’s rarely a bad idea to start saving your money. However, to invest your funds effectively, you need to do plenty of research.

There are many options available when it comes to savings accounts, but it's important to pick one that's right for you.

In this guide, we take a look at everything you need to know about choosing the best savings account.

ServiceScoreRegister
1. Yorkshire Building Society★★★★★Click Here
2. Paragon Bank★★★★★Click Here
3. Hampshire Trust Bank★★★★★Click Here
4. Nationwide★★★★Click Here
5. Metro Bank★★★★Click Here
6. Zenith Bank (UK)★★★★Click Here
7. United Trust Bank★★★★★Click Here
8. First Direct★★★★★Click Here

What Is a Savings Account?

A savings account is simply an account designed to help you save money. You pay spare cash into the account and in return, interest is usually paid on those funds.

Most major banks, as well as building societies and other institutions, offer a range of savings accounts. There are various types to choose from, depending whether you'd prefer to be able to access your cash as needed or if you're happy to keep your funds locked away for a set time.

Each account has an interest rate which determines how much money you’ll make on your account balance over the course of a year. This interest is usually paid monthly or annually depending on the bank and type of financial product.

There are several different types of savings accounts on offer. Below are listed some of the most common ones:

Regular Saver

This can be a great option if you're just starting to save and don't have a lump sum of cash to invest. Instead, you’re required to pay in a set amount each month, usually for 12 months. It’s a great way to watch your money grow.

Instant Access

With this account, you can add and withdraw money at any time, without penalty. Funds can be accessed instantly which makes this type of account ideal if you want to build a savings cushion that you can access in an emergency. However, interest rates are usually lower.

Fixed Bond

With this account, you deposit your money and leave it for a fixed term — usually between six months and five years. Interest rates are fixed for the term of the account and will typically be higher than an instant access account.

Notice Account

With this type of account, you'll need to give the savings provider a set number of days' notice to withdraw your money. If you don't, you could be penalised.

Why Should You Get a Savings Account?

Opening a savings account and setting aside a certain amount each month gives you the opportunity to build a savings cushion to fall back on if you need to cover emergency expenses.

But it can also help you to save for your future. Saving can help you pay for a holiday, home improvements, your child's education, or even your retirement.

Some accounts for savings require you to deposit a set amount in order to open one. However, many accounts let you get started with as little as £1. Generally speaking, the higher the initial deposit, the more interest you’ll receive on your money.

Of course, it’s not always the right financial move to focus on saving. If you currently have debts that you’re paying interest on, you should focus on paying those off first. Quite often, the interest on the debt will be higher than the amount you’ll get on your savings. Make sure that you weigh up your options before committing your money.

What Makes the Right Savings Account for You?

Choosing the right account for your money depends on your personal and financial circumstances.

For example, if your cash flow is limited or you have some significant expenses coming up, you might prefer to open an instant access account or maybe a regular saver that allows you to make small deposits on a regular basis.

On the other hand, if you have a large lump sum to invest and you don't need to access it for a while, you might prefer a fixed rate bond instead.

Is My Money Safe?

The short answer is yes.

As long as your chosen provider has a UK banking licence, your money will be covered by the Financial Services Compensation Scheme (FSCS) up to £85,000 per person, per banking group. This increases to £170,000 if you’re investing in a joint account.

This means you'll be able to get your money back if your provider were to cease trading.

If your savings account is with an e-money institution this must also follow certain rules to protect your money, but your funds won't be covered by the FSCS.

Will I Have to Pay Tax?

That depends. Thanks to the personal savings allowance, if you’re a basic rate taxpayer, you can earn up £1,000 in savings interest tax-free each year. Higher rate taxpayers can earn up to £500 tax-free each year, while additional rate taxpayers have no personal savings allowance.

However, keep in mind that as interest rates have been going up, it will now be much easier to hit your personal savings allowance. If you're worried about this, it's best to make the most of your ISA (Individual Savings Account) allowance which is £20,000 in the current tax year. No tax is payable on interest earned on savings held in a cash ISA.

The Best Savings Accounts for You

Below, we’ve picked out a number of the top savings accounts on the market.

We’ve tried to highlight a selection of different types, including regular savings, instant access, fixed bond, and notice account.

Our aim is to provide you with the pros and cons of each, as well as some information as to why we think they’re suitable. This method allows you to make an informed decision about which account you should open for your savings.

1. Yorkshire Building Society Internet Saver Plus — Easy Access

Pros

✔️ Gross interest rate of 4.80% AER (variable).

✔️ Open an account with just £1.

✔️ Unlimited withdrawals permitted.

Cons

❌️ Online only account.

Why we like it

This account from the Yorkshire Building Society offers a competitive interest rate on your savings and only requires a deposit of £1 to open it.

You can pay in funds whenever you have the extra cash and withdrawals are unlimited. However, the account can only be opened and managed online. Your money will be covered under the FSCS.

2. Paragon Bank 2 Year Fixed Rate — Fixed Bond

Pros

✔️ 5.10% AER fixed for 2 years.

✔️ Protected under FSCS scheme.

✔️ Minimum deposit of £1,000.

Cons

❌️ Additional deposits/early withdrawals are not permitted.

Why we like it

Paragon Bank offers a variety of fixed-term accounts, ranging from one year to five years. The interest rate increases the longer you tie up your money for. The two-year account gives a good balance between interest rate and commitment.

You can deposit between £1,000 and £500,000, but only the first £85,000 will be protected under the FSCS scheme. As with all fixed bond accounts, you won’t be able to touch your money until the full term of the account is up. This means you can’t add or withdraw funds. You can manage the account online or by post.

3. Hampshire Trust Bank Personal Notice Account

Pros

✔️ Gross interest rate of 5.51% AER (variable).

✔️ Minimum deposit of £1.

✔️ Notice period of 95 days.

Cons

❌️ You must give the required notice to access funds.

❌️ Interest rate is variable so could change.

Why we like it

Hampshire Trust Bank offers a competitive notice account paying 5.51% AER. However, you will need to give 95 days' notice to access your funds, so you must be sure you won't need your cash immediately. Accounts can be opened with just £1 and you can top up your funds as required.

Funds of up to £85,000 are protected by the FSCS. You can apply for an account online or, if you already hold an account with the bank, you can apply over the phone or by email.

4. Nationwide Flex Regular Saver

Pros

✔️ 8% AER (variable) on balances.

✔️ Pay in up to £200 a month.

✔️ 3 withdrawals permitted during the term.

✔️ FSCS protection.

Cons

❌️ You must be a Nationwide current account holder to qualify.

❌️ Interest rate drops if you make more than 3 withdrawals.

❌️ Account only lasts 12 months.

Why we like it

Nationwide's regular saver account offers a highly competitive interest rate of 8% AER. However, you must be an existing Nationwide current account holder to qualify.

You will need to pay in up to £200 a month for the 12-month term and you can make up to three withdrawals during that time, with no impact to your interest rate. If you make more than this, the rate drops to 2.15% AER. The account can only be managed online or via the app.

5. Metro Bank — Easy Access

Pros

✔️ 5.22% gross AER (variable).

✔️ Free withdrawals without penalties or notice.

✔️ Add funds whenever you want to.

Cons

❌️ Rate only guaranteed for 12 months, then it drops.

❌️ You must pay in at least £500 within 28 days to earn the top rate.

Why we like it

This easy access account from Metro Bank provides an excellent rate for 12 months. You can freely access your money at any point, meaning you won’t face penalties or have to give notice for withdrawals. You can also top up funds as required.

However, the 5.22% rate is only guaranteed for 12 months and will drop after this. You must also pay in at least £500 within 28 days of opening the account, otherwise the rate drops to 1.65% AER.

Existing customers can open the account through the mobile app or in branch. New customers will need to apply online.

6. Zenith Bank (UK) — 6-month Fixed Rate Bond

Pros

✔️ Fixed interest rate of 5.30% AER.

✔️ Term of six months.

Cons

❌️ Early withdrawal or closure not permitted.

❌️ Must pay in at least £1,000.

Why we like it

Like many other banks, Zenith offers a range of fixed-rate accounts. But if don't want to lock away your funds for a long time, this six-month bond could be worth considering. It pays a competitive 5.30% AER and you'll need at least £1,000 to invest.

As this is a fixed rate bond account, you won’t be able to access your money before the term ends and you won't be able to pay in additional funds after the first 14 days. You can open the account online.

7. United Trust Bank 200 Day — Notice Account

Pros

✔️ 5.58% AER (variable) on your balance.

✔️ Can be held jointly.

Cons

❌️ Long notice period of 200 days.

❌️ Only online access.

❌️ Minimum deposit of £5,000.

Why we like it

United Trust Bank offers a competitive rate of 5.58% on its 200-day notice account. However, this notice period is long, so it won't suit anyone looking to get quick access to their cash. It means you’ll have to manage your money closely and make requests well in advance of when you need your money.

The account also has a high deposit requirement of £5,000 so you'll need a lump sum to invest. You must also keep this amount in your account to continue to receive interest. However, it can be held as a joint account.

Your money will be protected up to £85,000 by the FSCS.

8. First Direct — Regular Saver

Pros

✔️ 7% AER for 12 months.

✔️ Excellent customer service.

✔️ Save between £25 and £300 a month.

Cons

❌️ Must have a First Direct bank account.

❌️ If you make a withdrawal, your account will close.

Why we like it

First Direct is a favourite amongst customers in the UK. Its banking services are constantly well-reviewed. This regular saver account is no exception. It pays a competitive rate of 7% AER and you'll need to pay in between £25 and £300 a month over the course of a year.

The major downside is that if you withdraw money from your account during the 12-month term, it will be immediately closed and the interest rate paid to you will be at a lower rate. You will also need to be a First Direct 1st Account holder to qualify.

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