Best ISA, easy access, and fixed savings accounts this week paying up to 8% interest
With a Base Rate cut "potentially imminent", hunting out the best savings deal while people still can is "imperative", an expert has said.
While the Bank of England Base Rate remains at a 16-year high of 5.25 percent, banks and building societies are still offering savers competitive returns on their money.
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 eight 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.
Oxbury Bank falls just behind with an AER of 5.02 percent on its Easy Access Account Limited Edition One for savers with a minimum deposit of £20,000. Up to £500,000 can be invested and interest is paid monthly.
For those looking for more flexibility with smaller sums to invest, Cynergy Bank offers an AER of 4.94 percent for a minimum deposit of £1. A bonus rate of 1.19 percent will be applied for 12 months and interest will be paid on the anniversary. Up to £1million can be invested overall and 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 5.4 percent interest rate. Savers need a minimum deposit of £1,000 to launch the account and interest is paid annually. Up to £1million can be invested and withdrawals can not be made until the term ends.
For two-year fixes, GB Bank takes the top spot with its Fixed Term Deposit offered through Raisin, offering an AER of five percent. A minimum deposit of £1,000 is required to open the account, interest is paid on maturity, and withdrawals are not permitted until the account matures. Up to £85,000 can be invested overall.
Close Brothers Savings is offering the top rate for three-year fixes with an AER of 4.8 percent. The account can be launched with a minimum deposit of £10,000, up to £2million can be invested overall, and interest is paid on maturity. Withdrawals are not permitted until the term ends.
For longer-term savers, United Trust Bank tops the list for four-year fixes with an AER of 4.35 percent. The account can be opened with a minimum deposit of £5,000 and up to £1million can be invested overall. Interest is paid on the anniversary and withdrawals are not permitted until the term ends.
Shawbrook Bank offers the top rate for five-year fixes with an AER of 4.57 percent. The account can be launched with a minimum deposit of £1,000 and up to £2million can be invested. Interest is paid on the anniversary and withdrawals are not allowed until the term matures.
Commenting on the market, Lucinda O'Brien, Money.co.uk’s savings expert, said: "There are still plenty of great deals in the market for savers, with one provider offering 5.4 percent on balances over £1,000.
"This deal is from Union Bank of India UK with its one-year fixed-rate bond, meaning savers could lock in this competitive interest rate for 12 months. Ziraat Bank via Raisin is its closest competition at 5.25 percent and this can also be opened with £1,000."
Elsewhere, Ms O'Brien noted: "There is little change in the market with top rates still above five percent on notice, easy and instant access accounts. However, always do your research and compare savings accounts as you’ll find that the top rates do come with different opening deposits.
"For example, Monument’s easy access savings account has an interest rate of 5.03 percent but you’ll need £25,000 as a minimum opening balance. This makes it less accessible for all savers, but Principality has an easy access account at a slightly lower rate of five percent but this can be opened with just £1 with three withdrawals each year."
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.
Principality Building Society takes the top spot for regular savings accounts 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 places just behind with an 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. Savers can deposit between £25 and £300 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.
The Co-operative Bank joins the top two, also offering a seven percent AER on its Regular Saver Issue One. Savers can deposit up to £250 a month and up to £3,000 can be invested in the account over the 12-month term. Interest is paid on maturity and withdrawals are permitted without penalty or notice.
Don't miss...
Ryanair ticket prices are plunging with flight costs 'materially lower' [INSIGHT]
'Overlooked' tip can boost pension savings by £463 a year on average [EXPLAINED]
Inheritance tax receipts hit £2bn in three months amid 'great wealth transfer' [ANALYSIS]
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.
Plum falls just behind with an AER of 5.17 percent off a £100 deposit. The interest rate includes a 0.86 percent bonus for 12 months. Interest is paid monthly and up to three withdrawals are permitted without facing a lower interest rate.
In the fixed rate sector, UBL UK places top of the list for one-year fixes with an AER of 4.95 percent. A minimum deposit of £2,000 is required to get started, interest is applied on maturity, and early access is permitted on closure and will be subject to 90 days' loss of interest.
UBL UK also takes the top spot for two-year fixes with an AER of 4.71 percent. The account can be opened with £2,000 and interest is paid on maturity. Earlier access is only permitted on closure and will be subject to 180 days' loss of interest.
For longer-term savers, United Trust Bank tops the board for four-year ISAs with an AER of 4.1 percent. The account can be opened with £5,000 and interest can be withdrawn annually or on the anniversary. Early withdrawals will be subject to 365 days' loss of interest.
UBL UK 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.
With a Bank of England Base Rate cut potentially imminent, Alice Haine, a personal finance analyst at Bestinvest by Evelyn Partners, said: "Hunting out the best deal while you still can is imperative, as is considering how tax-efficient your savings are.
“The Personal Savings Allowance has remained the same for eight years and is, therefore, more easily exceeded by the significantly higher bank and building society savings rates of late, which is why a more tax-efficient option such as ISA or pension is a sensible move for savers wanting to protect their nest eggs from the ravages of tax.”
Ms Haine added that tax paid on savings interest can “cancel out” the more lucrative position many savers currently find themselves in where inflation of two percent is easily surpassed by accounts offering the top savings rates, delivering an inflation-beating return.
Ms Haine continued: “HMRC is expecting to rake in up to £10.4billion in revenue from tax on savings interest this financial year, a sharp increase on the £6.6billion collected in the 2023-24 tax year, as more savers get caught out by high savings rates and a static Personal Savings Allowance.
“Adults can save or invest up to £20,000 in an ISA with all income and gains protected from tax. For those wanting to stash money away for the longer term to fund their retirement, then topping up their pensions is also a tax-efficient move as any contributions receive tax relief at the savers’ marginal rate of tax.”
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.”