You don’t have to lock your money away for years to get above-average and inflation-busting returns on your savings.
Interest on savings accounts surged following 14 consecutive Bank of England base rate rises (now at 5.25%) since December 2021.
In fact, the best paying accounts now beat inflation, which slowed to 3.4% in the year to February 2024, meaning your money will be gaining value in real terms. However, rates aren’t quite as good as the latter end of 2023, when it was possible to earn 8% with some savings accounts.
Currently, savers can get 5.21% AER/gross on a fixed rate deal, and only need to tie up money for six months with ICICI Bank, assuming at least £1,000 is saved.
But there are other ways to beat this rate and earn up to 7% interest on your savings without having to lock them up for years.
Earn 7% with Skipton Building Society
The Skipton Building Society Member Regular Saver (Issue 3) pays 7% gross/AER fixed for 12 months on a minimum £1 and maximum £3,000 per year. It can be opened online, app, over the phone, by post or in branch.
It’s for existing customers who have held a savings or mortgage account with the mutual on or before 11 January 2024.
The maximum you can deposit each calendar month is £250, though there’s no minimum monthly subscription amount or limit on the number of times you can deposit cash. Any unused allowance can be rolled up into the future months, which refreshes on the first of the month.
Based on £250 deposited each month with no withdrawals, you would have a total balance of £3,113 at maturity. You can’t withdraw cash during the term, but you can close the account and withdraw the balance.
Santander Edge Saver (Issue 1) paying 7%
Santander is paying 7% AER/6.78% gross (variable) on its linked easy access Edge Saver on balances up to £4,000 (no interest paid on savings above £4,000). This is split between an underlying rate of 4.5% AER (4.41% gross variable) and a bonus rate of 2.5% AER (2.47% gross variable) for the first 12 months of the account being opened.
To be eligible, you need to have or open a Santander Edge current account, which costs £3 per month, but allows customers to earn up to £20 per month in cashback on essential spending and household bills.
If you don’t already have online or mobile banking, you’ll need to wait for your login details to arrive before applying.
Earn 7% with First Direct
The First Direct Regular Saver offers 7% AER/gross to customers with a First Direct 1st Account. For new, non-First Direct customers who want the rate, you can open a 1st Account and then open a Regular Saver, bagging £175 for the switch in the process. Both new and existing customers must apply for the account online.
Account holders can save between £25 and £300 per month and you have to keep the money in the account for a year without withdrawals. The 7% interest will be paid in a lump sum after 12 months and, based on a £300 contribution each month over the year, you’ll earn £136.50 interest (gross).
Earn 7% with Co-op
The Co-operative Bank’s Regular Saver Issue 1 pays 7% AER/gross (variable), and savers can deposit up to £250 per month. You need to already have a Co-op current account before you apply.
There is no minimum monthly deposit – you change the amount you save each calendar month at any time.
If you paid in £250 each month for a year, you’d earn £114.21 in interest at the end of the year.
Get 6.75% with Coventry Building Society
In a bid to reward existing members, the Coventry Building Society’s Loyalty Regular Saver (Issue 2) account pays 6.75% AER/gross (variable) for 12 months on deposits up to £250 per month.
It can be opened online, in branch, over the phone or by post. Based on savers depositing the maximum £250 per month at the beginning of each month, £109.43 can be earned in interest.
You can access your cash, as withdrawals are allowed, though it is subject to a penalty charge equal to 30 days’ interest on the amount being taken out.
To be eligible, you need to have been a member of the society continuously since at least 1 January 2023.
Nationwide’s 6.5% regular savings account
The Nationwide Flex Regular Saver now pays 6.5% AER/gross (variable) interest for 12 months, down from 8% previously. You can save up to £200 per month, and it allows up to three penalty-free withdrawals per year. If a fourth withdrawal is made, the rate plummets to 2.15% AER/gross variable.
To get the Flex Regular Saver, you need to hold a Nationwide current account.
Earn 6.25% with the Club Lloyds Monthly Saver
The Club Lloyds Monthly Saver pays 6.25% AER for those depositing between £25 and £400 each month (it needs to land in your account before the 25th of the month), and allows you to withdraw your cash without penalty. It’s only for customers with a Club Lloyds current account. The saver account can be opened and managed online, by phone, via app and in branch.
The interest will be paid at the end of the 12-month period. Based on a £400 deposit every month for 12 months, you will have a balance of £4,950 after interest is paid. Upon maturity, cash is moved to its Standard Saver, which currently pays between 1.4% AER/gross variable and 1.9% gross/AER variable, depending on your balance.
Do note that the Club Lloyds current account has a £3 monthly fee, though it is waived each month you pay in £2,000 or more.
Other Lloyds current accounts (Platinum, Club Lloyds Platinum, Silver and Club Lloyds Silver) come with a monthly fee between £10 and £21, on top of the £3 per month Club Lloyds fee if you don’t pay in the minimum.
Earn 6.17% with NatWest or Royal Bank of Scotland
NatWest and RBS (part of the NatWest Group) both offer a Digital Regular Saver to their respective current account customers. NatWest has won Best Current Account Provider for five years in the annual YourMoney.com Awards.
The accounts pay 6.17% AER/6% gross (variable) interest on balances up to £5,000. Balances above this earn 1.75%/1.74% AER/gross (variable).
You can pay up to £150 via a standing order or ad-hoc payments into the account each calendar month, and you can withdraw money at any time.
Based on £150 deposited each month over a year, you would earn £59.83 in interest.
However, you can also set up debit card round-ups to be transferred to this account and they don’t count towards your monthly £150 limit – so it’s possible to stash away a lot more than £150 per month.
NatWest and RBS are currently running ‘Double Round Ups’, which allow customers to double the amount that is rounded up and transferred to savings accounts. For example, if you make a payment of £4.50 in a shop, with Double Round Ups, instead of 50p being transferred, it will transfer £1 to your savings account.
To quickly build your savings balance, use your NatWest or RBS debit card for all your everyday card purchases and, where possible, try to split transactions.
TSB Monthly Saver pays 6% AER
TSB’s Monthly Saver pays 6% AER/gross, fixed for 12 months for those with its current account. You can save between £25 and £250 each month (only one payment allowed each month). There are no penalties for withdrawals, but you can’t top up any withdrawn amounts.
Based on a £250 per month deposit, you would earn £85.57 at the end of the year.
Yorkshire Building Society’s 5.75% savings
The Yorkshire BS Loyalty Regular eSaver pays a variable interest rate of 5.75% AER/gross (variable) on balances up to £3,000, allowing savers to put away up to £250 per month for a year.
It can be opened online with £1 and also allows one penalty-free day for withdrawals during the year term. But customers can close the account at any point if they need to.
Savers paying in £250 at the start of the month for 12 months would end up with a balance of £3,092.95 if the interest rate remains at 5.75%.
But the new issue from Yorkshire Building Society (YBS) isn’t for everyone, just existing customers who save or have a mortgage with the mutual, and have had a continuous membership for at least 12 months prior to applying for the Loyalty Regular eSaver.
Existing customers from YBS, Chelsea, N&P, and YBS Shareplans cannot open a Loyalty Regular eSaver.
Halifax Regular Saver pays 5.5%
The Halifax Regular Saver pays 5.5% AER/gross on deposits between £25 and £250 per month (12-month term) and you don’t need to hold a current account with the bank to get this deal.
It can be opened online, via app, in branch and by phone. You can make a bank transfer to top up your savings and the amount you save each month can vary, just as long as the total amount of your deposits does not exceed the monthly limit of £250. The money also needs to reach your account by the 25th of each month.
If you deposit £250 every month, the balance after 12 months will be £3,082.50.
An Everyday Saver account will also be opened as part of the application. You will need to keep this account open so that Halifax can transfer your savings into it when your Regular Saver comes to the end of its term. Currently it offers up to 1.8% AER/gross (variable) interest, depending on your balance.
Fixed rate bonds
If you have a lump sum to save, fixed rate bonds often generate better returns than regular savings accounts, as you can deposit the full amount on day one.
The best rate on a six-month bond is 5.21% from ICICI Bank, on a minimum of £1,000, according to Moneyfacts. Hampshire Trust Bank pays slightly less on six-month money at 5.18%.
Beehive Money pays 5.18% AER on its one-year fixed rate bond, on a minimum £500 deposit. Two-year bonds pay slightly less, with iFast Global Bank paying 5.1% AER.
Longer-term fixed rate bonds are paying less at the moment, with Atom Bank paying 4.7% on its three-year bond and Al-Rayan Bank paying an expected profit rate of 4.55% on its five-year fixed term deposit.
