Best Savings Accounts
With Central Bank base rates globally so low and the UK Bank of England’s base rate at 0.10%, it’s difficult to find good savings accounts that will offer high rates of returns, with many banks offering less than 0.1% for an easy access account, it’s all the more important to shop around and ensure you’re money is in the correct account to allow it to grow and not fall a victim of inflation. If you prefer absolutely 0 risks of your money going down then basic savings accounts are one of the very few options. Generally, the options you have are between;
- Saving in a current account
- Easy Access Savers
- Fixed Rate savings accounts
- Cash ISAs
What account is right for me?
It can be baffling to decide what savings account is right for you, generally, this comes down to a few factors, the length of time that you can leave the money saved away, the amount you have to save, whether saving regularly or in a lump sum works best for you and if you may need to access it before a set time.
It’s important to ensure that when savings you stick with banks that are UK-regulated and offer FSCS protection, this will protect up to £85,000 of your savings in the event that your bank or building society is no longer able to provide you with your funds i.e. in the event of a bank going into liquidation or major unforeseen circumstances.
Most of your local high street banks will offer ISA savings accounts this can be a great way to minimize any taxes you may be eligible to pay, offering £20,000 per year to be saved tax-free, it is worth noting however that you are not expected to pay any tax on profits from your cash savings unless you go over your personal savings allowances.
Things to consider before opening a savings account
It’s worth considering a few things before opening a basic savings account, below is our little checklist to run through and consider first;
Are you overdrawn on your credit card?
If you owe money on a credit card and aren’t on a 0% interest repayment card then it would be sensible to pay this card off first before considering saving, the savings you can make from this may far outweigh the interest you can earn in a regular savings account. Consider this, you owe £1000 on your credit card, your APR is at 10%, you will pay £100 pounds interest if you do not pay this down. If you earn 1% in a savings account with a £1000 deposit you will only earn £10.00 for that year, so you would therefore be £90 better off.
It might seem like a good idea to save up whilst paying off your debt and then you can see your actual cash levels growing, however, this is not the case as you’re interest owed on the credit card will outstrip the benefits of holding cash. If you’re worried about not having the cash to spend on emergencies then you can always use your credit card for that at a later date.
Do you have a mortgage?
If you have an outstanding mortgage most banks will allow you to overpay, often up to 10% with no fee, after that, it will vary between lenders what fees they charge, however using up your fee-free allowance is always worth considering. If this is something that may apply to you, we recommend reading this guide by the website Which by clicking here, offers great explanations including pros and cons with examples for both saving and mortgage overpayments.
Will you need to access your money or can you lock it away?
If you’re okay with leaving your money away for a set period of time such as 1, 2 or maybe even 5 years then you are likely to be offered a better interest rate than an account where you have access to your funds whenever you’d like with no penalty on your interest. If you need to access your money or are unsure if you can leave it locked away for a long period of time then an Easy Access savings account might be best for you, if not then a fixed rate account may be the best option to look at.
Our top 3 Easy Access picks
Our top 3 Current accounts
|Bank||Rate (AER Variable)|
|Nationwide||2% (for first-year followed by 0.25%)|
|Lloyds Bank (Club Lloyds account)||0.6%|
Our top 3 Fixed accounts
|Bank||Rate (AER Variable)|
|Zopa (1 yr fixed – 5 year fixed)||1.06% – 1.51%|
|UBL UK (1yr fixed – 7 year fixed)||1.06% – 1.66%|
|Kent Reliance (1yr fixed – 2 year fixed)||1.01% – 1.12%|
All information is correct at the time of writing on 2nd July 2021, we will periodically check the rates and update them as new offers come out or if rates are reduced, always read the small print before committing to a new account and shop around.