Interest on savings accounts surged following 14 consecutive Bank of England base rate rises since December 2021, before the rate hiking cycle was paused.
But, since the start of August when the base rate was cut for the first time in four years (from 5.25% to 5%) providers have also slashed the amount they’re prepared to pay you for holding your cash. Average rates now come in below 5% across fixed and variable deals, according to Moneyfacts.
But the positive news is that inflation has come down from the eye-watering levels in 2022, to a more ‘normal’ 2.2%, meaning savings accounts beat inflation so your money is gaining value in real terms.
However, there are ways you can still earn up to 8% interest on your cash. Here’s how…
EARN 8% WITH PRINCIPALITY BUILDING SOCIETY
Principality’s 6 Month Regular Saver allows holders to save up to £200 per month for up to six months, in one or more payments. The account pays 8% AER fixed for six months.
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If you paid in £200 per month for six months, the estimated balance would be £1,227.53.
You can open an account in branch, at an agency or online. The bond will mature six months after the date it was opened. Do note, there’s no access to your cash before the end of the six month term.
EARN 8% WITH YORKSHIRE BUILDING SOCIETY
You can earn 8% AER with the mutual on a minimum £1 and maximum £50 a month via its £50 Regular Saver and online version (eSaver) accounts.
You can open the account in branch, by post or online with contributions accepted over a 12 month period. It’s technically an easy access account, but you can make withdrawals on any three days of the year, though there’s the option to close the account with no loss of interest.
One thing to note about this is that you cannot add money to the account from another Yorkshire or Chelsea Building Society account.
After 12 months, based on the maximum £50 a month contribution, you would earn £26.01 in interest.
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 HSBC
Banking giant HSBC pays 7% AER on £25 to £250 a month on its Regular Saver. In any months where you don’t pay in the maximum £250, you can carry the allowance over, just be mindful of the £3,000 total over the year.
To get the deal, you need to hold an active HSBC current account, excluding its basic bank account. It can be opened online or in branch.
After 12 months, based on paying £250 a month, you would have a balance of £3,1113.75, leaving you with £113.75 in interest.
This isn’t an instant access account, so you can’t access part or all of your cash during the term. But if you do close your account, you’ll receive interest at the HSBC Flexible Saver rate (currently 2% AER, falling to 1.75% AER from 18 November 2024).
EARN 7% WITH THE CO-OPERATIVE BANK
The Co-Operative Bank’s Regular Saver Issue 1 pays 7% AER on a minimum £1 and maximum £250 a month. The big catch here is that you need to hold its current account.
But on the plus side, you can pay into the account as often as you want, just as long as you don’t exceed £250 a month.
It can be opened in branch or online and you can access your money at any time. But the interest rate is variable so Co-Op could decrease (or increase) it.
If you deposited £250 each month over the year, your balance would stand at £3,114.21, meaning you’d accrue £114.21 in interest.
If you haven’t got a Co-Op current account, you can open it to then get access to the 7% regular saver account.
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.
NATIONWIDE’S 6.5% REGULAR SAVINGS ACCOUNT
The Nationwide Flex Regular Saver (Issue 3) 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.
If you manage to stash away £200 a month over the 12 months and don’t make a fourth withdrawal, your balance will stand at £2,484.50.
EARN 6.5% WITH VERNON BUILDING SOCIETY
Vernon’s Online Regular Saver pays 6.5% AER/gross (variable) interest for 12 months. You can save between £25 and £250 each month and withdrawals before the end of the term are not allowed. If you do need access to your cash, you’ll need to close your account, and Vernon won’t apply a penalty.
You can only apply for this account online and you must live in a postcode area beginning with BL, CH, CW, M, OL, SK, WA or WN.
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. Only one standing order or bank transfer can be made each month.
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 up to 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 1.6%/1.59% 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 £59.93 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.
SANTANDER EDGE SAVER (ISSUE 2) PAYS 6%
Santander is paying 6% AER/5.84% 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 1.5% AER (1.497% 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.
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.
WEST BROM FIXED RATE REGULAR SAVER PAYS 6% AER
West Brom’s Fixed Rate Regular Saver (Issue 7) pays 6% AER/gross (variable) interest for 12 months. You can save between £10 and £250 each month and withdrawals before the end of the term are not allowed.
Unused subscriptions from previous months cannot be made up in subsequent months.
Based on a £250 per month deposit, you would earn £85.57 at the end of the year.
This account can be opened in branch or online. To open an account online you must be an existing customer or live in one of its branch postcode areas (B, DY, WV, WS and SY).
Rates correct as at 17 September 2024, with thanks to Savings Champion and Moneyfacts data.
