In our fight to find you the best rates, each April in past years we've focused on the best cash ISAs - savings accounts you don't pay tax on - as it's when the new allowance hits (it's £20k this year). But as 98% now don't pay savings tax at all thanks to the personal savings allowance, and cash ISA rates are awful, they're no longer a no-brainer. So we're arming you with ALL the top savings instead.
When choosing, note that ISAs protect your interest from the taxman year after year - useful if rates rise or your savings stash increases. Plus, if you're a wannabe first-time buyer, consider Lifetime ISAs (which we explained last week) and Help to Buy ISAs first.
1. Earn up to a huge 5% easy-access via bank accounts. For many, the best savings account is likely to be, er, a bank account. The ones below give high interest on balances in their main accounts plus other perks, but have strict min pay-ins and other criteria.
- Get 5% on up to £2.5k. Nationwide FlexDirect* (choose 'FlexDirect' from accounts in the link) pays 5% AER fixed for 1yr on up to £2.5k if you pay in £1k+/mth. It also has a 5% AER variable regular saver into which you can save up to £500/mth.
- Get 3% on up to £5k. Bank of Scot pays 3% AER variable if you've £3k-£5k (dropping to 2% on up to £5k in June) and you can open three in all. You must pay in £1k+/mth, stay in credit & pay out 2 direct debits a month per account. Tesco pays 3% AER variable on up to £3k and most can open two, though you must pay in £750/mth and pay out at least three direct debits a month per account. TSB* pays 3% AER variable on up to £1.5k, if you pay in a min £500/mth, + register for online banking and go paperless. It also gives £10/mth cashback if you meet other key criteria.
- Get 1.5% on up to £20k. Santander 123* pays 1.5% AER variable on up to £20k. Its £5/mth fee is easily covered for most by up-to-3% bills cashback. A couple can have three accounts in all, but each needs a min £500/mth pay-in and two 'active' direct debits. Last week it boosted the rate from 3% to 5% fixed for 1yr on its linked regular saver, with a max pay-in of £200/mth.
- Who can get these? You need to pass a credit check. Full eligibility criteria and lots more info in Best Bank Accounts.
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2. Earn 5% fixed for a year with a regular saver. Some bank accounts also have linked regular savers, paying high interest but only on small sums, generally for a short time, and with min & max monthly deposits. Luckily the main bank accounts you need to get 'em are best buys.
- Switchers to First Direct* get a free £100 (min £1k/mth pay-in to avoid its £10/mth fee), plus it's been voted no.1 for customer service in all our polls. Its regular saver pays 5% fixed for 1yr on £25-£300/mth. M&S Bank* gives switchers a £50 M&S gift card and £5/mth for two years, when you pay a min £1k/mth into its current account, and switch & keep 2+ 'active' direct debits. Its linked saver pays 5% fixed for 1yr on £25-£250/mth.
- The Nationwide FlexDirect* and Santander 123* accounts mentioned above also have 5% regular savers, plus let you earn interest on their main accounts.
- Who can get these? As above, you need to pass a credit check. Full eligibility criteria and lots more info in Regular Savings Accounts.
- How's the interest calculated? It's a common misconception, but because it's a regular saver you don't get 5% on your end balance. If you save the same amount every month, you'll get 5% on approx half your end balance. Full reasons why in Regular Savings Accounts - don't believe the bad press.
3. New. Earn 2.2% fixed with the NS&I investment bond. This week the government-backed NS&I investment bond launched, paying 2.2% AER on £100 to £3k savings over a 3yr fixed term. You can withdraw money early, for the equivalent of 90 days interest.
It’s the best 3yr fix around, but isn’t special, and can be beaten by many of the bank accounts above. However because it’s backed by the Treasury, it's completely safe (unless the UK goes bust - in which case we’ve bigger problems).
4. Earn up to 2% in fixed-rate savings. Here the rate is set for a pre-defined time. While not always as lucrative as bank savings above, you can normally save a lot more. Importantly, with non-ISA fixes, your money is locked away for the duration; with an ISA you can withdraw it usually for a 3-6mth interest penalty.
- Top non-ISAs. Paragon Bank pays 1.51% for 1yr and Secure Trust Bank pays 1.85% for 2yrs. Over 3 yrs Secure Trust Bank gives you 2%.
- Top ISAs. Family Building Society pays 1.15% for 1yr, Yorkshire BS 1.25% for 2yrs & Coventry BS 1.4% for 3yrs.
- Non-ISAs smash ISAs on paper, but watch out if you pay savings tax. Eg, a higher-rate taxpayer with Paragon's 1.51% non-ISA fix would only earn 0.9% after tax and a top-rate payer 0.83%. As the best 1yr ISA pays 1.15%, they can win for some. Full help & best buys in Top Fixed-Rate Savings & Fixed ISAs.
5. Earn up to 1.15% via easy-access accounts. They're flexible as you can mostly withdraw money when you want, but the trade-off is lower rates.
- Top non-ISAs. Yorkshire BS pays 1.15% (min £100) but only allows one withdrawal/yr. Skipton BS pays 1.02% (incl a 0.21% bonus for a year) on a min £1. RCI Bank offers 1.1% with unlimited withdrawals, but as it's French-protected (up to €100,000), in the unlikely event it went bust, you're reliant on the French govt to bail you out. Not necessarily a problem, but worth knowing.
- Top ISAs. Coventry BS pays 1.05% on a min £1. RBS also pays 1.05% (incl 1% bonus fixed for 1yr) on exactly £20k, with unlimited withdrawals. Full best buys in Top Savings and Top Cash ISAs.
6. You have £85,000 protection per UK-regulated financial institution - not £75,000 as some banks state. The rules are plain - you're protected up to £85,000 by the Financial Services Compensation Scheme, and all accounts above offer this, except RCI.
Yet lots of you keep telling us your bank says it's £75,000. They're wrong, as it changed on 30 Jan. We updated our guides on the day, but banks have till June to update their info.Full details, incl what counts as an institution, in Are Your Savings Safe?
8. If you've debt you may be better clearing that instead. If the interest on your debt is more than savings will earn, you're likely better off dealing with the debt first. See Should I repay debt or save?
This article first appeared in the weekly email on 12 April 2017.
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