Martin Lewis’ money experts shed light on best savings accounts - including easy access & fixed rates

Martin Lewis’ team at MoneySavingExpert (MSE) has named some of the best savings accounts to bank with as rates make a comeback. Depending on your situation and requirements, there are a number of savings accounts to maximise your money including easy-access, notice and fixed-rate accounts below.

With inflation stagnating at 6.7%, well over the Bank of England target of 2%, the value of our money in savings is shrinking. While savings interest cannot make up for the impact of inflation, it does at least counter it to some extent. Meaning it’s doubly important to put some cash away and mitigate unexpected costs.

What are savings accounts?

In simple terms, a savings account is a type of bank account that gives you interest on the money you put into it. Some accounts require you to lock your money away for a certain period of time to secure the full interest payment. Whereas, other’s allow you to withdraw more freely. Here are five examples of savings accounts:

• Easy-access accounts: you can withdraw your money at any time (although there may be some rules you have to abide by).
• Regular savings accounts: require you to deposit a certain amount in them each month.
• Notice accounts: you have to notify the bank in advance that you’ll be withdrawing cash.
• Short-term fixed rates: your money is locked away at a particular rate for several months. You won’t be able to access it during this fixed period.
• Long-term fixed rates: your money is locked away for a period of years and usually cannot be accessed within this period without incurring a penalty.

Best savings accounts to bank with

Easy-access accounts

According to MSE, the top rates offered for easy-access accounts can come with some conditions so it’s crucial to read the terms and conditions before you sign up to one. The current top rate for easy-access accounts is 5.2%. The consumer website recommends two accounts :

NatWest Group’s Ulster Bank

One for those who want their savings with a name they’ve heard of. Yet you only get the 5.2% if you’ve £5,000+ in the account, so it won’t work for those with small savings. The account can be opened online and withdrawals are unlimited, so a good one to go for if you know you’ll often dip in to your savings.

Note: there are some regional restrictions. For example, joint accounts are only available for Northern Irish residents, and you can only open or operate an account on somebody’s behalf if your Power of Attorney is registered in Northern Ireland. Find out more by visiting the NatWest website.

Coventry Building Society

Coventry Building Society also offers the top rate of 5.2%, and pays it on £1+ in the account. However, it only allows three penalty-free withdrawals a year – the fourth and any subsequent withdrawals are charged a penalty equal to 50 days’ interest on the amount withdrawn – so this won’t be a good fit if you know you’ll need frequent access. Find out more information on Coventry Building Society’s website.

Notice savings accounts

MSE suggests banking with two institutions for a notice account. The company website writes:

RCI Bank

If you know you won’t need to dip into your savings for some time, RCI Bank offers 5.6% for 95 days’ notice (min £1,000). Find out more on RCI Bank’s website.

Monument 

If you need a shorter notice period, Monument offers both 5.41% for 60 days’ notice, as well as 5.22% for 35 days’ notice (both min £25,000). Find out more by visiting Monument Bank’s website.

Fixed-term savings accounts

MSE recommends a variety of fixed term accounts depending on how long you want to lock away your money for. Here’s the consumer website’s suggestions:

• Top six-month fixed account: Monument - 5.65%
• Top nine-month fixed account: Secure Trust Bank - 5.6%
• Top one-year fixed account: Ziraat Bank via Raisin - 6%
• Top two-year fixed account: Secure Trust Bank - 5.9%
• Top three year fixed account: JN Bank - 5.97%
• Top five year fixed account: JN Bank - 5.8%

If you’re a higher tax rate payer, or you have a big pot of savings you want to put away, you should look into getting an ISA. Savings accounts are only tax-free if your annual interest payments do not exceed £1,000 (for basic-rate taxpayers) or £500 (for higher rate taxpayers).