Interest rate rises may not be globally popular if you have a mortgage, but they do provide an opportunity to maximise your savings. But what are the best savings account rates right now?
Before getting attracted by headline rates, think ahead. Typically, better rates are available when you tie your money up in fixed term bonds. But you may lose any benefit if you need to access your funds before maturity.
Often, a mix of savings accounts offers a combination of flexibility and the best savings rates. (All interest rates quoted below are correct at the time of writing – January 2023).
Easy access savings
Easy access accounts allow you to access your money at any time – although some banks limit the number of withdrawals you can make per year.
Best rate: The Coventry Building Society is raising its rate to 3.25% from 6th January 2023 but there is a limit of six withdrawals per year without paying a penalty.
Zopa is currently offering 2.86% for unlimited withdrawals (as of 5th January 2023).
ISAs
If you don’t yet have an ISA, this should be your first type of account to consider as savings are tax-free.
Cash ISAs work in much the same way as easy access savings accounts – but with the added bonus that you get to keep more of the interest.
For details on Stocks and Shares ISAs or Lifetime ISAs designed to help you buy your first home or save for later life, read our guide to ISAs.
Best rate: The best cash ISA rate at the time of writing is 3% with Nationwide.
Notice accounts
Notice accounts allow you to access your funds but require a notice period to do so without a penalty. Typically, this is between 30 to 120 days, but some have notice periods of up to one year.
They are a hybrid option between instant access and fixed term savings accounts and can work for funds you hope to keep locked away but know you might need to dip into.
Best rate: The Mansfield Building Society has a 90-day notice account paying 3.5% but with a minimum balance of £1000.
A 90-day notice account that can be opened with just £1 is available from Oak North Bank and pays 3.2%.
30-day notice accounts typically pay around 0.35% right now.
Fixed term savings
There is currently very little incentive to lock funds into longer term savings accounts as they’re only marginally higher than those for one or two years.
Best rate: Smartsave offers the best 2-year fixed rate right now with 4.54% for savings between £10,000 – £85,000.
A 1-year version of this account is available at 4.26%.
Shawbrook Bank has a more flexible product that pays 4.41% on balances between £1000 and £2,000,000, with interest options available monthly, annually or at maturity.
The best option for a high street bank right now is a 1-year fixed term savings account with Nationwide. This account pays 4% interest at maturity and can be opened with as little as £1.