Best UK Savings Accounts Offering Above-Inflation Rates

UK households are always looking for ways to make their money grow amid a cost of living crisis and savings accounts can help.

After years of low rates, high yield savings accounts are having a good time as the Bank of England has kept interest rates at 5.25%, their highest level in 16 years. As homeowners face higher mortgages, there is a silver lining to higher borrowing costs and consumers can now find UK savings accounts offering higher inflation rates than the ‘inflation.

Britain’s inflation rate stood at 2% in May for the first time in almost three years, according to figures from the Office for National Statistics (ONS).

Savers should shop around for the best deals and check what rate they’re at – because they could still be sitting on a product that doesn’t beat inflation.

The main factor to consider when choosing a savings account is the difference between an easy-access savings account and a fixed-term account.

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Easy-access accounts allow you to access your money when you need it. Fixed-term accounts, as the name suggests, are accounts where you cannot access your money for the duration of the transaction. They usually offer better rates, but you need to be comfortable not touching your savings for a long period of time, usually between one and five years.

What are the best high interest fixed rate accounts?

The best fixed rate account currently offers 5.22% and is available from Oxbury.

Its six-month fixed rate offer requires a minimum of £1,000 and you can invest up to £500,000. Withdrawals are not permitted during the transaction period.

Vanquis offers 5.21% for one year with similar conditions. The fixed-term personal savings account requires a minimum of £1,000 to be locked in for 12 months. You can invest up to £250,000. Withdrawals are not allowed during the transaction period and you can only open it online.

Access Bank used to have the highest paying deal, but is now number three, with a one-year fixed rate deal that pays 5.20%. It requires a minimum of £5,000 and you can invest up to £500,000. Withdrawals are not permitted during the transaction period.

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Online banks typically offer higher rates than traditional brick-and-mortar branches, which translates into better returns, giving you a more efficient way to save and achieve your financial goals.

If you prefer to go with a familiar name, the big lenders offer slightly lower deals, but still beat inflation.

Barclays (BARC.L) offers the highest rate among mainstream lenders, with a one-year fixed-rate savings account earning 4.65%. The requirements are not too strict, with the minimum balance required being £500.

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Metro Bank is not far behind with its 4.61% interest rate and similar terms. The account has a fixed duration of one year and the minimum you need to pay is £500.

Lloyds (LLOY.L) offers a fixed rate savings product offering 4.35% over one year. However, the minimum deposit is £3,000 and you must have or open a Lloyds current or other savings account to be eligible. For new customers, the interest is 4.15%.

How do fixed rate savings accounts work?

Unlike easy-access savings, where interest rates can vary, fixed rate accounts earn a fixed interest rate for the period you choose, whether that’s six months or one, two, three or even five years. These are the most common deals, but some deals go up to 10 years and more.

You must leave your initial deposit for a specific period of time without making any withdrawals. If you touch your money, you lose all interest.

What are the best easy-to-access savings accounts?

Easy-access savings accounts allow you to withdraw your money without notice. This ease of access comes with lower interest rates, but they’re a good option for those who think they’ll need their money quickly.

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Be aware that the rates on these accounts are variable, meaning they can go up or down. You will be informed in advance of any changes.

Ulster Bank has the highest paying offer for easy access accounts at 5.20%, but you need at least £5,000 to open the account.

Chase has the second highest paying deal at 5.10%. You don’t need a minimum to open the account and you can invest up to £1,000,000.

Flagstone pays 5.07% with an easy-access account that pays interest daily. The account is provided through SmartSave and can be opened via mobile banking with a minimum deposit of £10,000.

There are easy-to-access accounts that pay even more, but they are not intended for new customers. Santander (BNC.L) Edge Saver, for example, offers 7%, but it’s only aimed at current account holders.

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Skipton Building Society pays 5.5%, but again the offer is only available to mortgage holders or those who had a savings account with the lender before January.

What are the best notice savings accounts?

Can’t decide whether you want to put your money away and not touch it for a long time or keep it accessible at all times? Perhaps you should consider a notice savings account.

Notice savings accounts require you to notify your savings provider before you can withdraw your funds.

They’re ideal for those who know when they might need their money, but don’t want to be tempted to dip into it at any time.

You must notify the bank or building society a certain amount of time before you can withdraw your money – usually between 30 and 120 days.

Vanquis offers a 90-day offer that earns 5.35%, currently the best offer on the market. You will need at least £1,000 to open it and can deposit up to £250,000.

Monument has a 60-day notice account that pays 5.27%. This means that as long as you give the lender about two months’ notice, you can access your money without any penalty. You need between £25,000 and £2,000,000 to apply.

Investec (INVP.L) has a 90-day notice account that pays 5.25% after three months. You need between £5,000 and £250,000 to apply.

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Interest rates on notice accounts are variable, meaning they can increase or decrease over time.

What are the best regular savings accounts?

For those looking to make the most of their cash savings, regular savings accounts offer returns of up to 8%.

Most regular savings accounts require you to put money aside each month and interest is paid annually. It is not uncommon for the offer to be available only to current customers.

The Principality offers 8% on a six-month regular saver account where you simply open an account with them and pay up to £200 each month. Interest is calculated daily on the money in the account and paid six months after opening it.

For existing customers, First Direct offers 7% for one year and allows a maximum monthly deposit of £300. You are not allowed to skip months, a minimum of £25 must be deposited into the account each month.

You are not allowed any withdrawals without penalty and, if you close the account before the end of the 12 months, the interest drops to 2%.

The cooperative bank is offering a 7% offer for existing customers. Fixed for one year, you can save up to £250 a month and skip months without penalties.

Nationwide previously offered a market-leading 8%, but this has fallen to 6.5%. Nationwide’s offering is a regular savings account, available exclusively to its current account customers.

For all the offers listed above, you can simply open an account to access the offer.

Saffron BS pays 8% as part of a limited Member Month Loyalty offer, but you must have been a member since June 1, 2023 to be eligible.

Skipton Building Society is offering 7%, but it is limited to customers who joined before January 2024.

Every transaction mentioned here is covered by the Financial Services Compensation Scheme, so you’re protected up to £85,000.

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