NimbleFins Best Savings Accounts Guide

If you’ve savings, it’s important to bag yourself the highest possible interest rate. If you don’t, you could be missing out on a decent return.

Savings rates are slowly on the rise following the Bank of England taking steps to increase the cost of borrowing. So, if you do have spare cash, now’s a great time to act.

Here’s everything you need to know about finding the best savings account for you.

In this guide

What are the best savings accounts?

The best savings account for you will depend on how much you have saved and how often you plan to withdraw cash. So, whether you want easy access or you’re happy to lock away funds, here’s the top-rated savings accounts available right now.

Best easy-access savings accounts

If you want instant access to your cash, an easy-access savings account will be your best option as these accounts let you to add and withdraw funds at will.

Here’s a list of the highest paying accounts:

AccountRate (AER variable)Minimum depositAny catches?
Paragon Bank5.16%£1,000Max 2 withdrawals/yr or rate drops to 1.5%.
Close Brothers5.12%£10,000Withdrawals allowed but rate drops to 1% if your balance falls below £10,000.
Monument Bank5.11%£25,000App-only.

Best notice savings accounts

If you’re happy to give your savings provider some advance notice before making a withdrawal, you can boost the interest rate on your cash with a notice account.

Here’s the top picks:

AccountNotice PeriodRate (AER variable)Minimum deposit
Vanquis Bank90 Days5.4%£1,000
FirstSave90 Days5.25%£100
Cynergy Bank120 Days5.25%£500

Best fixed savings accounts

If you’re happy to lock away cash, here are the best fixed-rate savings accounts for you to consider:

AccountFixed rate durationRate (AER fixed)Minimum deposit
Allica Bank6 months5.17%£10,000
Smart Save1 year5.21%£10,000
Hampshire Trust Bank5 years4.51%£1

Best regular savings accounts

If you can save regularly and you don’t have a lump sum to stash away, a regular savings account could be for you.

Here’s the pick of the best accounts:

AccountRate (AER)Maximum monthly depositAny catches?
Skipton BS7% (fixed for 1 year)£250Must have been a Skipton member since 31 May 2023. No withdrawals permitted
First Direct7% (fixed for 1 year)£300Must have a First Direct Current account. No withdrawals permitted
Nationwide6.5% variable£200Must have a Nationwide current account. If you make 4 or more withdrawals the rate drops to 2.15% AER.
Lloyds Bank6.25% fixed for 1yr£400Must have Club Lloyds current account
NatWest6.17% variable (up to £5,000)£150Must have eligible NatWest savings or current account

Best sharia savings accounts

If you’re looking for a savings account that follows Islamic Banking principles, here are the top-rated sharia savings accounts.

AccountType of accountExpected profit rate (AER)Minimum Deposit
Al RayanEasy access4%£5,000
Al Rayan1 year fixed5.05%£5,000
BLME5 year fixed4.3%£1,000

What is a savings account?

A savings account is a financial product offered by a financial institution, such as a bank or building society.

Money deposited in a savings account is technically lent to the institution providing the account. This is why savings accounts pay savers a rate of interest.

In years gone by—especially prior to the 2008 financial crash - interest rates on savings accounts between 3-5% were commonplace. However, fast-forward to the present day and rates are now far less generous.

The explosion of cheap credit and the Bank of England keeping its base rate at rock-bottom levels are two big reasons why savings rates have been pitiful over recent years. That said, the tide may (finally) be starting to turn as there are signs rates are starting to creep up.

What are the types of savings accounts?

If you’ve savings, you may be wondering where you should stash your cash given there are so many different types of savings accounts out there.

To help you choose the best home for your cash, let’s take a closer look at the different types of savings accounts.

What is an easy-access savings account?

An easy-access savings account allows you to add and withdraw funds at will. In other words, open an easy-access account and you’ll enjoy the freedom to access your funds as often (or as little) as you like.

Having the ability to access your cash easily can be a big boon, especially if the variable interest rate on your account drops, or a temporary bonus rate comes to an end. That’s because easy access gives you the freedom to move your cash to another account whenever you like.

However, there’s a price to pay for this convenience. That’s because easy-access accounts rarely offer the highest rates of interest compared to other types of saving accounts. So, if you don’t need instant access to your cash, you can often boost your interest rate by choosing a different account.

What is a notice savings account?

A notice savings account works similar to an easy-access account. Rates are often variable too.

The main difference between notice accounts and easy-access is the process of making withdrawals. That’s because if you wish to make a withdrawal from a notice account you must notify your savings provider in advance.

Typically, notice periods range from 45 to 90 days, though with some accounts it can be as long as 180 days. Usually, the longer the notice period the higher the interest rate.

Notice accounts can be a good option if you’re willing to forgo to convenience of having immediate access to your cash, but you don’t necessarily want to lock away your cash for a long period of time.

What is a fixed savings account?

With a fixed savings account you must lock away your cash for a set period. Fixed periods typically vary from 1 to 5 years. The longer the term, the higher the rate of interest you can expect to earn—though this rule isn’t set in stone.

Whichever fixed term you go for, if your money is stashed in a market-leading fixed account you can be confident of earning a higher rate than you would through easy-access.

With fixed accounts, rates are also ‘fixed’ giving you certainty of the rate for the duration of the term.

When it comes to locking away cash it is however important to keep in mind the impact of inflation on your savings. That’s because inflation essentially erodes the real value of your savings. For example, if your fixed savings account pays 2% interest, but annual inflation is running at 10%, the real value of your savings is declining.

While keeping up with inflation in any type of savings account can be difficult at the best of times, if your money sits in a fixed account there’s nothing you can do should the inflation rate begin to accelerate. In contrast, cash in an easy-access account can be easily moved.

What is a regular savings account?

Regular savings accounts are designed for savers who can save each month. Take a look at the headline rates on these accounts and you may be impressed. That’s because regular savings accounts often boost high interest, especially when compared with easy-access offerings.

However, consider the fact that regular savers are sometimes run by banks as a ‘loss leader’ in order to attract new customers. This is why many of the highest paying accounts are reserved for customers of a particular bank or building society. Despite this, there are regular savings accounts open to all.

It’s also worth bearing in mind that regular savings accounts limit the amount you put into them each month. Plus, it’s often the case that these accounts only offer a high rate of interest for one year. Usually when the year’s up, your money is transferred to another account paying a misery rate.

Despite these drawbacks, regular savings accounts can still be a winner for those happy to drip-feed in cash each month. They can also be ideal for savers who don’t need a home for a huge lump sum.

What is a sharia savings account?

Sharia savings accounts come in a number of forms—easy-access, notice, or fixed. As a result, they aren’t really a ‘type’ of savings account as such. That said sharia saving accounts are different to normal savings accounts in the way that they follow Islamic banking principles. Because of this, sharia accounts don’t pay interest. Instead, they pay an ‘expected profit rate.’

This means that, technically, sharia accounts don’t have to pay out their advertised profit rate though they almost always do.

If you’re looking to earn a decent return on your cash, you shouldn’t discount sharia options as rates are often competitive. Importantly, you don’t have to be a follower of Islam to open one of these accounts.

Savings accounts: Five must-knows.

1. Savings accounts DON’T require a hard credit check. If you open a savings account, you won’t normally have to undergo anything more than a check to verify your identity.

In contrast, open a bank account or sign up for a credit card and you’ll often have to pass a ‘hard’ credit check which is recorded on your credit file.

2. Your cash is protected up to £85,000 per institution. FSCS savings safety is very important. That’s because if your savings provider goes bust, you’ll get your money back—up to the £85,000 limit (For joint accounts, the limit is £170,000). This protection applies as long as your provider has a UK banking licence.

Note: Some banks share FSCS protection with others, so this is something to keep in mind. For example, Halifax shares its FSCS savings safety protection with Bank of Scotland. As a result, savers shouldn’t stash more than £85,000 across these two providers. If you’re unsure if your savings provider shares its savings safety protection the FSCS has a handy tool on its website.

3. Savings rates lag behind the rate of inflation. The UK inflation rate is very high right now and no savings account pays anything close to it. So, while it’s worth ensuring you’re earning the highest interest rate possible, even the best savings account will leave you worse off (in real terms) in the long-term.

Sadly, there’s no sure way of beating inflation. Even if you look into investing or buying fixed assets, there’s no guarantee you’ll come out on top.

4. The Bank of England has the power to massively impact savings rates. The reason savings rates are low right now is partly due to policies of the UK central bank. That’s because the Bank of England sets the rate at which banks lend to one another. This is known as the ‘base rate’ or ‘bank rate.’

While the base rate has risen three times already in 2022, it’s still historically very low. For as long as this remains the case, savings rates are unlikely to rise substantially any time soon.

5. You (probably) don’t have to pay tax on your savings interest. The Personal Savings Allowance means basic-rate taxpayers in the UK can earn £1,000 savings interest every year without having to pay a penny in tax. For higher-rate taxpayers, it’s £500.

With savings rates low right now, unless you’ve a huge sum, it’s unlikely you’ll need to notify the taxman. If you’re lucky enough to have a substantial amount of savings that puts you close to the tax-free limit, it’s worth looking at opening a Cash ISA.

FAQs

How many savings accounts can I have?

Savings accounts aren’t like bank accounts in the way that you don’t have to pass a credit check to open one. As a result, there’s nothing stopping you opening multiple savings accounts.

How does interest work on a savings account?

When you deposit funds into a savings account you’ll earn interest. The interest you earn comes in the form of an annual equivalent rate (AER) which can be variable or fixed.

If the AER is variable your savings provider can alter it in future. If the rate is fixed, your provider can’t alter it.

How often is interest paid from a savings account?

Savings providers typically pay interest monthly, quarterly or annually.

Note: If you save in a sharia account, you don’t earn interest. Instead, you earn an ‘expected profit rate.’

What is a high interest savings account?

A high interest savings account simply refers to a savings account that pays a high level of interest compared to other accounts.

Regular savings accounts are often classified as ‘high interest accounts’ given the headline interest rates on these accounts are often generous.

How can I open a savings account?

The process of opening a savings account typically varies between providers. Some providers will allow you to open an account online, over the phone, in branch, or even by post. Other accounts may be app-only, meaning you’ll have to own a smartphone in order to open an account.

Regardless of how you open a savings accounts it’s fair to say that the process is often straightforward. With saving accounts there are no credit checks to pass, through ID checks are common.

Is my money safe in a savings account?

If your savings provider has a UK banking licence your cash is safe in the (unlikely) event the provider goes bust. This is all thanks to the £85,000 FSCS savings safety protection provided by the UK Government which guarantees the deposits of savers up to this limit.

For providers without a UK banking licence this protection won’t apply. However, if you save in a non-UK account, you may still be able to benefit from another form of savings safety protection.

For example, if saving in a European bank, it’s likely your money will be covered under a savings safety protection scheme. That’s because such protections are also common in Europe. However, if you do have money saved in a European bank and it goes bust, you’ll be reliant on an overseas Government to return your cash.

What’s the difference between a savings account and a Cash ISA?

A Cash ISA refers to a tax-free savings account. In other words, you don’t have to pay tax on any interest you earn from a Cash ISA. Every tax year, the Government gives savers a set amount that they can stash into an ISA. For the 2022/23 tax year the limit is £20,000.

However, thanks to the Personal Savings Allowance, most UK taxpayers don’t pay tax on interest earned from normal savings accounts anyway. As a result, the tax benefits of Cash ISAs aren’t really that useful for most. Plus, interest rates offered on Cash ISA typically lag behind those offered on normal savings accounts.

Should I save or overpay my mortgage?

If you’ve an outstanding mortgage with an interest rate higher than market-leading savings account, then it’s seriously worth overpaying your mortgage instead of putting your spare cash in savings. However, be mindful that most mortgage providers will limit the amount you can overpay.

Also be mindful that it’s probably a good idea to keep an emergency savings fund, regardless of your outstanding mortgage balance. It’s often suggested that it’s wise to have 3-6 months of expenses in the form of easily accessible savings tucked away.

What is a savings account with a signup bonus?

Not all savings accounts work in the same way. That’s because some savings accounts may offer a temporary fixed bonus rate. Bonus rates typically last for a year.

While you shouldn’t disregard accounts with a bonus rate, if you do opt for one of these accounts, it’s worth bearing in mind that after the bonus ends your interest rate will almost certainly plummet.

What are alternatives to savings accounts?

Bank accounts, also known as ‘current accounts,’ are sometimes seen as alternatives to savings accounts. That’s because there are often no limits as to how much you can keep in a current account.

In the past, keeping cash in a bank account was a big no-no due to the fact that banks rarely paid account holders any interest on their cash. However, over the past few years some bank accounts have started to offer accounts that pay interest. However, interest is usually only payable on small amounts so those with large savings are probably better off sticking to normal savings accounts.

How can you close a savings account?

If you want to close a savings account, you’ll usually have to contact your savings provider. To do this you can log into your account and send your provider a secure message stating that you wish to close your account. Alternatively, you may be able to close a savings account by post, over the phone, or even in branch (if your provider has one).

It’s worth knowing that some savings providers may give you the option of closing your account once you withdraw your full balance.

What is an online savings account?

An online savings account refers to a savings account that can only be opened and managed online.

Online-only savings accounts are becoming more and more common, especially among challenger banks that don’t usually have physical branches.

What is an app-only savings account?

An app-only savings account refers to a savings account that can only be opened and managed via a mobile app.

Atom Bank is perhaps the most well-known app-only savings provider.

What is an automatic savings app?

Automatic savings apps have taken off in recent years. These are nifty mobile applications that can calculate how much money you can afford to save each month based on your everyday spending habits. After doing these calculations, these apps can then ‘autosave’ for you via a linked account.

It can be argued that these apps target those who would otherwise find it difficult to put cash aside each month.

How can inflation impact my savings?

Inflation refers to the rate at which the prices of everyday goods are rising by. If you put your savings into an account lower than the rate of inflation, the value of your cash is effectively declining in real terms.

Unfortunately, keeping up with inflation is often easier said than done. Right now, the UK inflation rate is very high, and there’s sadly no savings account out there that pays a rate anywhere close it. That said, it’s still worth earning the highest interest rate you can possibly can. Earning a small amount of interest is better than nothing.

Karl Talbot

Karl is a personal finance expert who specialises in writing about savings accounts, credit cards and cheap personal loans. Karl has worked for a number of personal finance publications including The Motley Fool and MoneySavingExpert.

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