Best savings accounts this week offering interest rates up to 8%

While the Bank of England Base Rate rests at a 15-year high of 5.25 percent, high street banks and building societies are offering some of the highest interest rates seen in decades.

Some savings accounts are currently paying up to eight percent interest, but a significant number of people are missing out. According to an analysis by Paragon Bank, nearly one in six new fixed and instant access adult savings accounts opened in the 12 months to August 2023 offered a rate of 1.5 percent or less.

By value, £28.3billion was placed in newly opened adult fixed and instant access accounts earning 1.5 percent or below, with £26.5billion of that placed in instant access variants.

Derek Sprawling, savings director at Paragon Bank, said: “Whilst it is encouraging that savers are opening new accounts, nearly one in six accounts are earning relatively low rates of interest given the competitive rate environment of the past 12 months. The mantra of shop around for the best deal still applies in a higher rate environment, perhaps even more so given the premium some providers are offering on rates.”

There are a number of different accounts suitable for a range of circumstances, from easy access accounts to fixed term savers, and some are offering some of the highest interest rates seen in decades. Here are the top rate easy access, regular, fixed rate and cash ISA accounts on offer this week.

Top easy access savings accounts

Easy access accounts are typically more flexible, as these allow savers to make payments and withdrawals with minimal restrictions and with small opening deposit requirements.

Topping the leaderboard of easy access savings accounts offering the highest interest rate is Paragon Bank’s Double Access Savings Account (Issue Three) with an AER of 5.25 percent.

The account can be opened with a minimum deposit of £1,000 and up to £500,000 can be invested overall. Interest can be paid monthly or annually, and just two withdrawals are permitted per year – any more and the rate reduces to 1.5 percent.

For savers looking for a bit more freedom to access their money, Beehive Money is offering an AER of 5.2 percent on a minimum deposit of £1,000. Unlimited withdrawals are permitted at any time without penalty, however, savers must keep at least £1,000 in the account to retain the 5.2 percent rate. Up to £85,000 can be invested and interest is paid annually.

Close Brothers Savings Easy Access Account (Issue One) places just behind with an AER of 5.15 percent. The account can be opened with just £10,000 and up to £2million can be invested overall. Interest is paid annually and unlimited withdrawals are permitted, however, at least £10,000 must be kept in the account to retain the 5.15 percent rate.

Top fixed rate savings accounts

Fixed-rate accounts add another level of certainty to savings, as these accounts enable savers to lock in an interest rate for a set length of time. However, they typically possess stricter withdrawal limits, meaning savers should be comfortable investing money without needing to access it during the account term.

The Union Bank of India takes the top spot for both one-year and two-year fixes with AERs of 6.05 percent and six percent respectively. The accounts can be opened with a minimum deposit of £1,000, interest is paid annually, and withdrawals are not permitted.

Meanwhile, JN Bank tops the list for three, four, and five-year fixes with its Fixed Term Savings Account offering AERs of 5.97 percent and 5.8 percent respectively. The accounts can be opened with a minimum deposit of £1,000 and interest is paid annually and on maturity. Up to £500,000 can be invested overall and withdrawals are not permitted.

Commenting on the fixed savings market, Rachel Springall, finance expert at moneyfactscompare.co.uk, said: “One area of the market not blessed by rate rises this month is longer-term fixed bonds, with the average rate falling for the first time since March 2023, while the average longer-term fixed ISA rate stood still.

“This signals a turnaround for the longer-term fixed rate market, perhaps not too unexpected with Base Rate remaining on hold and the markets expecting rates to drop in the months ahead. Those savers considering a fixed bond or ISA may wish to act quickly to take advantage of the highest rates.”

Regular savings accounts

Regular savings accounts can be a good option for those looking to get into a savings habit, as these accounts typically offer higher interest rates and the terms generally encourage savers to pay money into the accounts monthly.

Nationwide is currently offering regular savers the highest returns on the market with an AER of eight percent. The rate is fixed for 12 months and Britons can get started with just £1.

Interest is calculated daily and paid on maturity of the account exactly one year after opening. The rate is based on how many withdrawals a person makes in the year – if four or more are made, interest will drop to 2.15 percent. Savers can deposit up to £200 per month and savers must have a Nationwide Current Account to apply.

The telephone and online-based bank first direct falls just behind with an AER of seven percent. The rate is fixed for 12 months and Britons can get started with just £25.

Interest is calculated daily and paid on maturity of the account exactly one year after opening. Savers can deposit between £25 and £300 per month in multiples of £5. Withdrawals are not permitted throughout the duration of the 12-month term. In the event of this, the account will have to close and interest will be paid up to the closure date at the Savings Account variable rate instead.

Lloyds Bank’s Club Lloyds Monthly Saver places next with an AER of 6.25 percent. A £25 deposit is required to open this account and the term runs for 12 months, which means up to £4,800 can be invested over the course of the year.

The account is available to Club Lloyds customers and unlimited withdrawals are permitted without penalty. The interest rate is fixed and will be paid on the anniversary of the account opening, and deposits between £25 and £400 must be invested before the 25th of every month.

Tipton and Cosley Building Society’s Fixed Rate Regular Saver offers a competitive rate of 6.2 percent until October 31, 2024. The account can be opened with a minimum deposit of £25 and up to £250 can be invested every month. Interest is calculated daily and applied annually on December 31 and maturity. Savers must be aged 16 or over and withdrawals are not permitted.

Top cash ISAs

Cash ISAs are a particularly popular option, as these accounts enable savers’ money to grow without having to pay tax on the interest above the Personal Savings Allowance (PSA). However, some ISAs can come with a few more restrictions, like penalty charges for early access or transfers.

For those who need instant access to their cash ISA, Zopa’s Smart ISA tops the list with an AER of 5.08 percent. The account can be opened with just £1 by savers aged 18 and over via the Zopa app and withdrawals can be made at any time.

For those looking for a fixed rate, Virgin Money’s One Year Fixed Rate Cash ISA Exclusive (Issue Six) tops the list for one-year fixes with an AER of 5.85 percent. There is no minimum investment amount to get started and a charge equivalent to 60 days’ interest will be applied in the instance of an early withdrawal.

For two-year fixes, NatWest’s Two Year Fixed Rate ISA (Issue 333) places first with an AER of 5.65 percent. The account can be opened with a slightly larger deposit of £1,000 and interest is calculated daily and applied annually and on maturity.

Savers will also need to be comfortable investing their money without dipping in as this account comes with a withdrawal charge equivalent to 90 days’ interest.

Zopa’s Smart Saver is currently placing top for three and five-year fixes with AERs of 5.51 percent and 5.05 percent respectively. The accounts can be opened with just £1 by savers aged 18 and over via the Zopa app. Zopa’s smart ISAs are flexible and allow money to be withdrawn and replaced in the same tax year without affecting their allowance.