Best ISA, easy access, and fixed savings accounts this week paying up to 10.38% interest
Savers are being urged to lock in market-leading interest rates "immediately" as deals are projected to fall in the coming months after the Bank of England's decision to reduce the Base Rate.
Savers are being urged to cash in on high interest rates sooner rather than later following the Bank of England's decision to cut the Base Rate for the first time in more than four years.
While savers aren't able to cash in on the peak interest rates seen last summer, some savings accounts are still paying rates of up to 10.38 percent and a significant number of people are missing out.
According to research by Shawbrook Bank, almost a quarter of savers (24 percent) are earning two percent interest or less on savings despite the current average easy access rate standing higher than this.
Adam Thrower, head of savings at Shawbrook said: "If you don’t know what you’re earning on your savings, it’s likely you aren’t earning much and therefore you could be losing out on hundreds of pounds. Move your money now before it’s too late."
There are a range of different accounts suitable for a variety of needs - from easy access accounts to fixed term savers - and some are still offering particularly attractive rates. Here are the top accounts on offer this week, at the time of writing.
Top easy access savings accounts
Easy access accounts are typically more flexible, as these allow savers to make payments and withdrawals with minimal restrictions and with small opening deposit requirements. Given the current high-living-cost environment, a survey from Hodge found more than half of respondents have had to dip into their savings for everyday expenses.
Still topping the leaderboard of easy access savings accounts offering the highest interest rate is Ulster Bank's Loyalty Saver with an Annual Equivalent Rate (AER) of 5.2 percent on deposits of over £5,000. Those with deposits lower than £5,000 will be paid a lower AER of 2.25 percent. Interest is paid annually and on account closure, and withdrawals are permitted at any time up to the daily limits.
Principality Bank falls just behind with an AER of five percent on its Online Bonus Triple Access (Issue Two). The account includes a 1.4 percent bonus for 12 months and savers need a minimum deposit of £1 to get started. Up to three withdrawals are permitted per calednar year and interest is paid annually.
For those looking for more flexibility with smaller sums to invest, Monument Bank, offered through Raisin UK pays an AER of 4.91 percent for a minimum deposit of £1,000. Interest is paid monthly and up to £85,000 can be invested overall. There are no restrictions on withdrawals.
Top fixed rate savings accounts
Fixed-rate savers can be beneficial during the current period of falling rates, as these enable people to lock in an interest rate for a set length of time. However, they typically impose stricter withdrawal limits on customers, meaning savers should be comfortable investing money without needing to access it during the account term.
Topping the table for one-year fixes is the United Bank of India with a 5.25 percent interest rate. Savers need a minimum deposit of £5,000 to launch the account and interest is paid on maturity. Up to £340,000 can be invested and withdrawals cannot be made until the term ends.
For two-year fixes, Nottingham Building Society takes the top spot with its Fixed Rate Bond (Issue 332), offering an AER of 4.8 percent. A minimum deposit of £500 is required to open the account, interest is paid yearly, and withdrawals are not permitted until the account matures. Up to £750,000 can be invested overall.
UBL UK tops the list for three-year fixes with its account, offered through Raisin UK, with an AER of 4.63 percent. The account can be opened with a minimum deposit of £1,000 and up to £85,000 can be invested overall. Interest is paid on maturity and withdrawals are not permitted until the term ends.
For longer-term savers, Oxbury Bank tops the list for four-year savers with an AER of 4.31 percent. A minimum deposit of £2,000 is required to open the account and interest is paid on maturity. Up to £85,000 can be invested and withdrawals are not permitted until the term ends.
Al Rayan Bank offers the top rate for five-year fixes with an Expected Profit Rate (EPR) of 4.55 percent. The account can be launched with a minimum deposit of £1,000 and up to £85,000 can be invested. Profit is paid on maturity and withdrawals are not allowed until the term matures.
Commenting on the fixed rate savings market, Caitlyn Eastell, a spokesperson at Moneyfactscompare.co.uk, said: “Since the previous inflation announcement, fixed rates have faced further reductions, so it may be wise for savers to begin considering locking into an interest rate while the majority continue to pay competitive returns.
“Longer-term rates have suffered the most, seeing drops as large as 0.31 percent for a five-year term month-on-month. Although, typically, base rate cuts usually impact variable rates, we have been seeing an increasing number of providers lowering rates on accounts offering fixed returns.”
Meanwhile, Ms Eastell noted: “Shorter-term savers are continuing to be incentivised with higher top rates, however, they have been experiencing some drops; the previous market-leading non-ISA one-year bond lasted a couple of weeks, so it is imperative savers act quickly. For now, top-rate variable accounts have seen little volatility since the previous inflation announcement, but it remains to be seen how long this lasts.”
Regular savings accounts
Regular savings accounts can be a good option for those looking to get into a savings habit, as these accounts typically offer higher interest rates and the terms generally encourage savers to pay money into the accounts monthly.
Virgin Money takes the top spot for regular savings accounts with its bumper 10.38 percent AER. The rate is fixed until July 2025 and up to £250 can be invested per month. There is no minimum deposit to open the account, and savers must have a Virgin Money current account that was opened on or after December 4, 2019.
Principality Building Society now falls just behind with an AER of eight percent. The term of the account runs for six months and up to £200 can be invested per month. The account can be opened with a minimum deposit of £1 and interest is paid on maturity.
The online-based digital bank first direct is also offering a competitive AER of seven percent. The rate is fixed for 12 months and Britons can get started with just £25. Interest is calculated daily and paid on account maturity exactly one year after opening. Between £25 and £300 can be deposited per month in multiples of £5. Withdrawals are not permitted throughout the 12-month term. In this event, the account will have to close and interest will be paid up to the closure date at the Savings Account variable rate instead.
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Top Cash ISAs
Cash ISAs are a popular savings option, as these accounts enable people's money to grow without having to pay tax on the interest above the Personal Savings Allowance (PSA). However, some ISAs can come with a few more restrictions, like penalty charges for early access or transfers.
For those who need instant access to their cash ISA, Trading 212 is now taking the top spot with its Cash ISA offering an AER of 5.2 percent. There are no withdrawal restrictions and interest is paid daily.
In the fixed rate sector, Virgin Money places top of the list for one-year fixes with an AER of 5.05 percent. There is no minimum deposit required to get started, interest is applied on maturity, and early access will be subject to 60 days' loss of interest.
Nottingham Building Society takes the top spot for two-year fixes with an AER of 4.73 percent. The account can be opened with £500 and interest is paid yearly. Earlier access is only permitted on transfers out and will be subject to 180 days' loss of interest.
For longer-term savers, UBL UK tops the board for four-year ISAs with an AER of 4.05 percent. The account can be opened with £2,000 and interest is paid on maturity. Early withdrawals is permitted on clousre only and will be subject to 365 days' loss of interest.
UBL UK also offers the top rate for five-year fixed ISAs with an AER of 4.26 percent. The account can be opened with a minimum deposit of £2,000 and interest is applied on maturity. Earlier access is permitted on closure only and will be subject to a 365-day loss of interest.
What is an ISA?
ISA stands for Individual Savings Account.
The main difference between an ISA and other savings accounts is it offers tax-free interest payments.
The ISA allowance for the 2024/25 tax year is £20,000.
You can have a cash ISA - including a Help to Buy ISA - a stocks and shares ISA, an innovative finance ISA, a Lifetime ISA or a mixture of them all.
You must save or invest by April 5 - the end of the tax year.
Cash ISA popularity has significantly risen this tax year as savers proactively attempt to dodge increasing tax implications brought on by frozen allowances and higher interest rates. Paragon Bank recorded a notable 40 percent jump in new ISA applications during the first week of the new tax year.
Additionally, the average balance deposited in Paragon fixed-rate Cash ISAs during the week following April 6 was 45 percent higher than the average balance in the corresponding period in 2023.
Derek Sprawling, managing director at Paragon Bank Savings said: “The 2023/24 tax year was one of the strongest ISA seasons on record and the new tax year has carried on in a similar manner. We had our busiest ever day for applications on April 8 as savers looked to open their new ISA early in the new tax year to take full advantage of the tax-free wrapper.”
He added: “It is encouraging that nearly two-thirds of our active cash ISA savers fully utilised their £20,000 allowance last tax year, with a similar proportion looking to do the same this year. As ISAs celebrate the 25th anniversary of their launch, it’s positive to see that they are thriving.”
But while savers are encouraged to take steps to protect their savings earnings, last week's Bank of England Base Rate drop could spell slightly less positive news for future returns.