Got cash under the mattress? Here's 3 ways to boost your savings in 2023 (& beyond)

If you're looking for a New Year's resolution, then why not make it your mission to max the interest rate on your savings in 2023?

There are a number of ways you can do this and, in this article, we're going to explain everything you need to know...

Is now a good time to sort your savings?

In 2022 the Bank of England increased its base rate on eight occasions which has had a massive impact on the cost of borrowing.

For context, at the turn of 2021 the base rate sat at just 0.25%. Fast forward 12 months or so and it's now at 3.5%

Higher borrowing costs can be a boon for those holding cash as it can lead to rise in savings rates across the board. This has certainly happened in 2022 where we've seen rates slowly, but surely, climb as the year has gone on.

Right now, average savings rates are much, much higher than they were a year ago, while market-leading deals are the best they've been in over a decade. What this all means is that now's a GREAT time to sort your savings — especially if you've cash sitting in a legacy savings account paying you next to nothing.

What are the best easy-access accounts available right now?

If you're keen to make your money work harder for you, but you still want the flexibility to access your cash, then easy-access is probably for you.

Easy-access savings accounts allow you to add and withdraw cash whenever you want. Right now, the market-leading easy access deal is from Zopa. Its account pays 2.86% AER variable interest and you can open it with £1+. The account is app-only though, so you'll need a smart device to open it.

If that doesn't quite hit the spot then Coventry Building Society pays a slightly lower 2.85% AER variable and you can open an account online. You can also save from as little as £1. However, this account does have a slight drawback, as the account stretches the definition of 'easy-access'. Thats because you can only make six penalty-free withdrawals a year. If you make more than this, then you'll have to pay a 50-day interest penalty which will apply to your seventh withdrawal onwards.

It's worth knowing that with easy-access accounts, interest rates are variable which means they can change at any time. However if you open an account and the rate falls you'll be notified well in advance of any changes. This means you'll have time to move your cash if better rates can be found elsewhere.

3 ways to boost the interest rate on your cash

While easy-access accounts are very popular, did you know there are other ways you can boost the interest rate on your cash?

Let's take a look at three ways to make your money work harder...

1. Open a regular savings account.

Regular savings accounts are designed for savers who are able to squirrel away cash each month.

These accounts often have juicy headline interest rates, and the top account right now pays savers a massive 7% AER(!) Yet there are a few things you should know about regular savings accounts. Firstly, the the highest rates are usually on linked accounts, which means you need to be a customer of a particular bank or building society to open one. This is no biggie as you can always open a new bank account, but it's certainly a hurdle worth knowing about.

Also, regular savings accounts often stipulate that you can only save a limited amount each month. This means they aren't much use if you've a lump sum. That said, if you can save every month, and you've a bank account with a big-name provider, then it's likely a regular savings account could be a straightforward way to boost the interest rate on your cash.

For a full list of offerings, take a look at the regular savings accounts section in our best savings guide.

2. Consider a notice savings account.

Notice savings accounts are similar to easy-access in the way that interest rates are variable and you can deposit money at will. The main difference is that you must give your provider some notice if you want to make a withdrawal.

For example, if open a notice savings account with a 90-day notice period, you'll have to wait 90 days if you want to access your cash.

Interest rates on market-leading notice accounts usually beat easy-access offerings. Plus, if you want to further boost the interest rate on your money you can go for an account with a long notice period. That's because, generally, the longer the notice period the higher the interest rate.

Right now the top 90-day and 120-day notice accounts are both offered from OakNorth Bank. Its 90-day offering pays 3.2% AER variable, while its 120 day offering pays 3.35% AER variable. Either account can be opened with as little as £1.

3. Lock away cash in a fixed savings account.

If you don't need easy access to your cash then a fixed savings account could be for you. This is where you lock away cash for a set period of time. In return you'll earn yourself a higher rate of interest on your cash compared to easy-access accounts.

The longer the fix, the higher interest you can expect to earn. However, locking away cash for a very long time carriers risk. For example, if rates on other accounts rise in future you wouldn't be able to move your money to benefit.

Right now, the top one-year fixed account pays 4.25 AER fixed via Atom bank. You only need £50 to open the account, though you'll need to download Atom's mobile app.

If you want to fix for longer then Cynergy Bank pays 4.6% AER fixed for three years (min £10,000). If you want to fix for five years you can, though the highest rate from Aldermore also pays 4.6 AER (min £1,000) so there's probably little point going for it over Cynergy's three-year offering.

Note: Rates are changing constantly so to see a list of top rates right now take a look at our best savings accounts guide.

How your savings are protected

All accounts mentioned above have the full £85,000 FSCS savings safety protection. To learn more about what this means, take a look at our article: Got savings? Here's why FSCS savings safety protection is important.