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How to get an inflation-beating 8% interest rate without tying up your savings for years

How to get an inflation-beating 8% interest rate without tying up your savings for years
Your Money
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Your Money

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 rose 4.6% in the year to October 2023, meaning your money will be gaining value in real terms. This is a situation we haven’t seen for years.

Currently, savers can get 5.8% AER/gross on a fixed rate deal, but it means tying up your cash for a year with Metro Bank on a minimum £500 deposit.

But there are other ways to beat this rate and earn up to 8% interest on your cash without having to lock it up for years.

Nationwide’s 8% regular savings account

The Nationwide Flex Regular Saver pays 8% AER/gross (variable) interest for 12 months, the highest amount of any savings account on the market. You can save up to £200 per month and it allows up to three penalty-free withdrawals a 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 and right now, new customers can bank £200 for switching their everyday banking to the mutual.

By combining the two offers, customers opening its popular FlexDirect current account could earn up to £377 in the first year:

  • £200 switching offer
  • 5% in-credit interest fixed for 12 months on balances up to £1,500 which generates £73 interest
  • £104 in interest by putting away £200 in the regular saver on the first day of each month.

Earn 7.5% with Skipton Building Society

The Skipton Building Society Member Regular Saver (Issue 2) pays 7.5% gross/AER fixed for 12 months on a minimum £1 and maximum £3,000 a year. It can be opened online, 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 31 May 2023.

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 1st.

Based on £250 deposited each month with no withdrawals, you would have a total balance of £3,121 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 now 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 a month but allows customers to earn up to £20 a 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 log on details to arrive before applying​.​

Get 7% with Coventry Building Society

In a bid to reward existing members, the Coventry Building Society’s Loyalty Regular Saver account pays 7% AER/gross (variable) for 12 months on deposits up to £250 a month.

It can be opened online, in branch, over the phone or by post. Based on savers depositing the maximum £250 a month at the beginning of each month, £113.87 can be earnt 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 2022.

Yorkshire Building Society’s 7% savings

The Yorkshire BS Loyalty Regular Saver pays a variable interest rate of 7% AER/gross (variable) on balances up to £6,000, allowing savers to put away up to £500 a month for a year.

It can be opened in branch, agencies and online (eSaver) 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 £500 at the start of the month for 12 months would end up with a balance of £6,227.40 if the interest rate remains at 7%.

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 Saver.

It’s available to existing customers from the following brands: YBS, Chelsea, N&P, and YBS Shareplans. The online version of the account can only be opened if a customer already has online access.

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 a 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 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 a 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 won Best Everyday Current Account Provider at the YourMoney.com Awards 2022.

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 a 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 has increased the rate on its linked Monthly Saver to 6% gross/AER, 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 a month deposit, you would earn £85.57 at the end of the year.

Halifax Regular Saver pays 5.5%

The Halifax Regular Saver pays 5.5% AER/gross on deposits between £25 and £250 a 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 are happy to tie your money up for longer, fixed rate bonds offer better interest rates than easy access or regular savings accounts.

The best rate on a one-year bond is 5.8% AER/gross on Metro Bank’s Fixed Term Savings Account – 1 Year on a minimum £500, according to Savings Champion data. Metro Bank also pays 5.8% on its 18-month bond.

Meanwhile, JN Bank UK pays 5.5% AER for savers locking up cash for three years, four years and five years on a £1,000 minimum deposit. The accounts can be opened online, though can be managed online and by phone.