Best savings accounts – which accounts pay the highest interest?

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If you’re looking for a savings account, which ones pay the most? Find out which banks and building societies offer the best savings accounts.

Best savings accounts

I’ve looked at Savings Champion and Moneyfacts to compile my list of the best savings accounts. Because the Bank of England only raised interest rates recently, these rates may change. All interest rates quoted are gross, which means the interest rate before any tax is taken off.

SAVVY TIP: I’ve not included cash ISAs in this article for two reasons. Firstly, the interest rates on ordinary savings accounts are higher (as I write this) than they are on cash ISAs and, secondly, you can earn up to £1,000 a year in interest tax free if you’re a basic rate taxpayer (£500 if you pay tax at the higher rate) so you may not have to lose any of the interest to tax.

Best easy access savings accounts

As I write this, the highest interest rate you can get on an easy access savings account is 1.45%. A number of banks are going to be increasing their interest rates on December 1st, so it’s worth checking again after then.

  • BM Savings Internet Saver Account (yearly interest): pays 1.45% interest on balances of £1. Although it’s the highest rate, watch out because the account changes to a Standard Saver Account after 12 months. As I write this, the Standard Saver Account pays a measly 0.2%.

SAVVYWOMAN VIEW: While I’m pleased that you can earn 1.45% on savings without having to give any notice, I am not impressed by the fact it transfers to an account paying just 0.2% interest after one year. If you switch to this, make sure you switch away again when the 12 months is up.

Interest paid: monthly or annually.

Account operated? You can open and manage the account online.

SAVVY TIP: Only switch to this account if you know you’ll move your money elsewhere after the first 12 months, when the interest rate will drop sharply.

Is your money protected? BM Savings is covered by the UK savings compensation scheme, the FSCS. This means that your savings up to a limit of £85,000 (or £170,000 for a joint account) are protected. However, as it’s part of Halifax, Bank of Scotland, any money you have in other accounts operated by them, such as Halifax and Bank of Scotland, are part of that limit.

  • Virgin Money Double Take E Saver: You can earn 1.36% interest as long as you don’t make more than two withdrawals a year from this account. You have to manage the

Interest paid: monthly or annually.

Account operated? You can open and manage the account online.

Is your money protected? Virgin Money is covered by the UK savings compensation scheme, the FSCS. This means that your savings up to a limit of £85,000 (or £170,000 for a joint account) are protected.

Interest paid: on the anniversary of you opening the account.

Account operated? You have to open and manage the account online.

Is your money protected? RCI Bank is covered by the French savings protection scheme (called the FGDR), meaning €100,000 is protected. You can find out how your money is protected on the FGDR website.

  • Bank of Cyprus Online Easy Access Account: it pays 1.25% but that includes a 0.4% bonus for 12 months. This means the rate will fall to 0.85% after 12 months. You earn this rate on balances of £1+ but you can save up to £1 million in it.

Interest paid: on the anniversary of you opening the account.

Account operated? You have to open and manage the account online.

Is your money protected? Yes, Bank of Cyprus UK is covered by the Financial Services Compensation Scheme. This means that your savings up to a limit of £85,000 (or £170,000 for a joint account) are protected.

 

 

 

Interest paid: monthly or annually.

Account operated? You have to open the account online and can manage it online or by phone.

Is your money protected? Yes, Shawbrook Bank is covered by the Financial Services Compensation Scheme. This means that your savings up to a limit of £85,000 (or £170,000 for a joint account) are protected.

One year fixed rate savings accounts

You can earn a higher rate of interest if you are happy to lock your money away for a year. You normally have to deposit the money you want all in one go (you can’t top it up regularly), so it’s only suitable if you have a cash lump sum, rather than saving a regular amount out of your wages.

SAVVY TIP: It’s worth checking whether you can take out any of your money before the term is up. With some fixed rate savings accounts, you can get early access if you pay a penalty, but with others you can’t.

Atom Bank One Year Fixed Rate Saver (yearly interest): pays 1.95% on balances of £50 or more. Atom Bank is a mobile-only bank, so you have to download the app.

Interest paid: monthly or annually (but you have to go to a different part of the website/app to open the monthly interest account).

Account operated? You have to open and manage the account via your mobile.

Is your money protected? Yes, Atom Bank is covered by the Financial Services Compensation Scheme. This means that your savings up to a limit of £85,000 (or £170,000 for a joint account) are protected.

Oaknorth Bank 12 Month Fixed Term Deposit Account: pays 1.87% on balances of £1,000 or more. Oaknorth Bank is a new bank (it launched in September 2015) set up ‘by entrepreneurs, for entrepreneurs’ (that’s it’s tagline). It is fully licensed as a UK bank.

SAVVY TIP: After the 12 months are up, your money is transferred to Oaknorth Bank’s easy access account. This is currently paying 0.95%, but this rate isn’t guaranteed or fixed.

Interest paid: when the account matures.

Account operated? You have to open and manage the account via your mobile.

Is your money protected? Yes, Oaknorth Bank is covered by the Financial Services Compensation Scheme. This means that your savings up to a limit of £85,000 (or £170,000 for a joint account) are protected.

Paragon Bank Limited One Year Fixed rate Account: pays 1.31% . There’s no bonus. You earn this rate on balances of £1,000 but you can save up to £100,000 in it.

Interest paid: monthly or yearly. It’s either on the day of the month you made your first payment or on the anniversary of you making your first payment.

Account operated? You have to open and manage the account online.

Is your money protected? Paragon Bank is covered by the Financial Services Compensation Scheme. This means that your savings up to a limit of £85,000 (or £170,000 for a joint account) are protected.

Useful links:

I’ll be talking about savings rates in my next SavvyWoman Podcast. Sign up on iTunes (for iPhones and iPads) or Stitcher (for Android phones) so you don’t miss it.

Related articles:

Tax-free savings allowance explained; interest of up to £1,000 a year tax free

10 things you need to know about making a savings claim to the Financial Services Compensation Scheme.

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