What are the best high interest rates on savings accounts? How to make your money work for you

Financial life would be a lot easier if there was just one kind of account for your money and it worked in the most effective way possible.

Unfortunately, those who hold our funds safe don’t quite let it function like that – but with a little effort on our part, we can make our money work as hard as possible and get us extra benefits along the way.

One key way to do exactly that is to pay into a high interest savings account – putting your money away for emergency funds, future use or simply saving up for something specific. Here we’ve rounded up some of the best interest rates possible to access right now in the UK.

Higher interest rates for your money are important because they are a tool which can help counteract one of the forces which works against how much your cash is worth: inflation, in other words, the cost of buying things going up.

Rates below are correct at the time of going to press but are always subject to change, while different account types let you access your money in different ways or at specified times, so be sure to check which is right for your circumstances. As always, read the terms and conditions if you are considering using any of these accounts, as they may also have different requirements and stipulations to get the indicated rates.

Important to know: Gross interest is the rate of interest before income tax is deducted. AER stands for Annual Equivalent Rate and shows what the interest rate would be if interest was paid and compounded once each year. This makes it easier to compare rates across accounts of different types and lengths. Your own income and circumstances will determine whether you pay tax on interest earned.

Easy access and current accounts

The most common type of savings account is an easy access one which, as the name suggests, usually allows you to access your saved money with fewer restrictions – but do always make sure you are aware if there are a maximum number of withdrawals allowed, how long it takes to get your money out and anything else which is important to you.

Likewise, it’s possible to get a current account that pays a higher rate of interest, but again these can come with particular timeframes the interest is valid for or other stipulations, so always make sure the account suits your needs.

A current account with Chase offers 5% for new customers, made up of 3.5% basic rate plus a 1.5% bonus, which is applied for six months. There is also a 1% cashback offer and other rewards available for the app-based account, which you need to open a linked saver in to get the additional bonus.

Nationwide offers 5% AER too, but this is for a maximum of £1,500. There’s 1% cashback on purchases with a set limit, but to get both of these features you need to pay in at least £1,000 each month, likely making it your main current account.

For easy access savings accounts, Atom Bank is offering a 4.85% rate, but this is best-used for those who do not plan to withdraw money – the rate will drop to 3.25% in any month where you do make one. Interest is paid monthly and joint accounts are not allowed.

For unlimited withdrawals, Chetwood Bank pays 4.71%, with next working day access to money for withdrawals.

If you prefer a bigger name bank, Virgin Money pays 4.51% and you can have three withdrawals a year without incurring a penalty, while Leeds Building Society offers 4.4% with the interest paid annually, but you can make unlimited withdrawals – as long as you have a minimum of £1,000 in the account at all times.

Fixed rates and regular savers

Regular saver accounts target those who can commit to a specified amount (sometimes a minimum, sometimes a maximum) going in each month. The following two are open to all, including new customers.

Principality Building Society is offering 8% AER for an account which can be used for six months. There is a maximum allowed amount of £200 paid in each month, with interest paid at the end of the six-month term. Withdrawals are not allowed from the account and the interest rate will not be lowered during the term.

To save more for longer, Halifax offers 5.50% AER/gross for a one year regular saver, with a minimum of £25 and a maximum of £250 allowed to be saved monthly. Again no withdrawals can be made, unless you are closing the account.

There are further options for existing customers at different places.

First Direct is offering a fixed 7% rate for one year for its current customers, with £300 monthly maximum deposited and a minimum of £25 each month. However, if the account is closed and withdrawals made before the end of the 12-month term, only 1.75% interest will be paid on the time the money was in. As is often the case with regular saver accounts, the interest is paid at the end of the term.

Co-Operative Bank also offers similar with a 7% rate to existing clients, though in its case you can access your money without fees or penalties. The maximum per month is £250 saved. Notably, interest and saved funds are transferred at the end of the 12 months into a separate (Smart Saver) account which has a lower interest rate. This is fairly standard practice, but means you should take note of the date and decide where to put your money next rather than leave it.

Lloyds offers 6.25% and allows up to £400 a month to be saved in the account, with the rate fixed for a year and interest paid upon completion.

In many cases, those who want the rates but are not current customers can use a switching service to move entirely to that bank from their current provider, then open the higher rate savings account once sorted – but you should always check terms first.

ISAs

Slightly different but still worth considering, cash ISAs can be considered savings accounts that you never pay tax on. There are more rules around them – you can put a maximum of £20,000 each financial year into an ISA, for example – but they can still act as high interest rate-paying savings accounts if used right.

To note, a stocks and shares ISA can hold cash but does not usually pay interest on it unless specified.

Moneybox is currently paying what it heralds as a “market-leading” 5% AER variable rate in its cash ISA. The minimum balance you must hold is £500 and you can make a maximum of three withdrawals in the 12-month period without affecting that rate. If the balance falls below £500 you’ll get 0.75% though, and the same rate will apply if you make a fourth withdrawal in 12 months. This is only open to those who haven’t opened a cash ISA with Moneybox previously and interest is paid at the end of 12 months, while other terms naturally apply. You should also note Moneybox deposits your funds around other banks’ accounts, rather than holding it themselves.

When investing, your capital is at risk and you may get back less than invested. Past performance doesn’t guarantee future results.