If you’re over 60 and looking for the best savings account, the right one for you will depend on whether you’ll need regular access to your money, or if you’re prepared to tie it up for a year or more.
It will also depend on how you want to operate your account, and whether you want to receive interest annually or monthly. For example, you might prefer to manage your savings online, either via your mobile or computer, or you may be more comfortable with a postal, branch-based or telephone account.
Here, we’ve rounded up some of the best savings accounts for over 60s, depending on the length of time you want to commit your money for, whether you’re looking for tax-free returns, and how you want to manage your account.
What are the best savings accounts for over 60s in the UK?
After years of savers finding it impossible to earn real returns on their savings, there are now more than 1,500 accounts paying inflation-beating returns, according to Moneyfactscompare.co.uk.
Being able to earn returns that keep pace with rising living costs is really important for savers of all ages, but especially for over 60s savers who often depend on savings returns to supplement their retirement income, and who don’t want to take any risks with their cash.
Below, we highlight some of the best savings accounts for over 60s in the UK, which you can filter to find the right type of account to suit your needs. Bear in mind that if, for any unlikely reason the bank or savings provider you hold money with runs into financial difficulties, the Financial Services Compensation Scheme (FSCS) will cover your savings up to £85,000 with a single institution, so if you have two accounts with the same bank which together hold more than £85,000, you won’t get the full amount back. Find out more in our guide Are my savings safe?
Savings made easy with Raisin UK
Raisin UK provides a free savings platform where you can apply to open savings accounts with over 30 banks and building societies. Enjoy competitive interest rates from FSCS-protected banks.
Best online easy access savings account for over 60s
If you like managing your money online, either using your mobile or a computer, then the good news is online accounts almost always pay the top rates on interest. That’s because online savings providers have lower overheads due to not having branches and are therefore able to pass some of this benefit on to their customers.
Our table, supplied by Raisin UK and updated weekly, shows the best easy access accounts currently available:
Top 5 Easy Access accounts
by Raisin UK
Interest (AER): 4.87%
Interest on £5,000:
+£247
Guarantee:
£85,000
Interest (AER): 4.67%
Interest on £5,000:
+£237
Guarantee:
£85,000
Interest (AER): 4.50%
Interest on £5,000:
+£228
Guarantee:
£85,000
Interest (AER): 4.46%
Interest on £5,000:
+£226
Guarantee:
£85,000
Interest (AER): 4.39%
Interest on £5,000:
+£223
Guarantee:
£85,000
Best postal, phone and branch-operated accounts for over 60s
Although the most competitive savings rates are generally offered by online accounts, if you prefer to operate your savings accounts by telephone, in branches or by post, then there are still options to choose from.
Current best buys if you’re looking for a branch-based easy access savings account include the Ulster Bank Loyalty Saver account which currently pays 5.20% annual interest before tax on a minimum opening balance of £5,000. Interest on this account is paid annually. This account can also be opened and operated online if you prefer.
Alternatively, Coventry Building Society’s Sunny Day Saver account pays an impressive 6.25% AER. The account is designed for savers keen to put away a regular amount each month for a year; for each month that you save at least £10 (with a maximum monthly limit of £150), you’ll be entered into a prize draw with a chance to win a cash prize. This account can be opened in branches, over the phone, by post or online, and unlike many regular savings accounts you can access your money at any time.
Best cash ISAs for over 60s
If you’re looking for tax-free returns, a cash individual savings account (ISA) is well worth considering.
Principality Building Society’s Online Bonus 5 Access Cash ISA currently pays a market-leading rate of 5% on a minimum opening balance of £1. As the name suggests, this account can only be opened and operated online. Watch out for the small print though, as only five withdrawals are permitted each tax year, and the rate includes a variable 1.45% bonus for the first 12 months.
Savings made easy with Raisin UK
Raisin UK provides a free savings platform where you can apply to open savings accounts with over 30 banks and building societies. Enjoy competitive interest rates from FSCS-protected banks.
If you want an account you can manage in person at a branch or by post, then Chorley Building Society pays 4.85 on an opening balance of just £1 held in its Easy Access Cash ISA. It can also be opened and managed online. However, contrary to the name, only one withdrawal is permitted per account year (1st January to 31st December). Additional withdrawals will result in a lower rate of interest being paid.
Best fixed rate savings accounts for over 60s
The highest-paying fixed rate savings bonds are all online-only accounts, with the top one-year bond from Raisin, provided by Mizrahi Tefahot Bank, paying 5% on a minimum balance of £1,000. If you can afford to tie up your savings for a bit longer, Raisin’s two year Fixed Term Deposit account, provided by Ziraat Bank, pays 4.72%, again on a minimum deposit of £1,000. These accounts can only be opened online.
If you’d prefer a branch-based account, Union Bank of India UK pays 4.95% annual interest on an opening balance of £1,00 held in its One Year Fixed Rate Deposit account. You can open and manage this account in branches, by post or phone.
Fixed rate cash ISAs are also worth a look. For example, Virgin Money is paying 4.75% annual interest on its one-year Fixed Rate Cash ISA Exclusive Issue 15 which can be opened with £1in branches or online. Once opened, this account can be managed using mobile Banking, online, by post or by telephone. However, to qualify for this account you need to have a current account with Virgin Money which was opened on or after 4 December 2019, or you originally opened your current account with Clydesdale Bank, Yorkshire Bank or B.
United Trust Bank’ss one year Fixed Rate cash ISA pays a similarly generous 4.65% on a minimum opening balance of £5,000, and this account can be managed online, by post or telephone.
Don’t forget pensions!
Pensions can also be a great home for your savings, especially as you’ll receive tax relief on the contributions you make. For example, if you’re a basic rate taxpayer a £100 contribution into your pension will currently only cost you £80 thanks to tax relief. If you’re a higher rate taxpayer the same contribution will only set you back £60.
If you’re in your 60s it could be even more worthwhile paying into a pension if you’re looking ahead to retirement, as you’ll still qualify for tax relief on your contributions up to the age of 75 and you’ll also be able to access your pension savings (including the top up from the taxman) much sooner than someone younger. Read more in our guide How pension tax relief works.
Even paying in a small amount each month can make a difference to your retirement pot, because of the effect of your returns generating more returns (known as compounding).
Remember, however, that once you’ve started taking money out of your pension, the amount you can pay into your pension, known as your Annual Allowance falls from £60,000 to £10,000 and becomes known as the Money Purchase Annual Allowance (MPAA). If you simply take a 25% tax-free lump sum from your pension, you will not be subject to the MPPA. Learn more in our article What is the Money Purchase Annual Allowance?
Another benefit of saving into a pension is that under current rules, any money left in your pension drawdown plan when you pass away may be passed on to your beneficiaries tax-free, provided you’re aged 75 or younger. If you’re older than 75, you can still pass on your remaining retirement savings, but your beneficiaries will usually have to pay income tax on the money they receive. Find out more in our guide What happens to my pension when I die?
If you’re considering seeking professional financial advice on the options available to you, we’ve partnered with nationwide independent advice firm Fidelius to offer Rest Less members a free initial consultation with a qualified financial advisor. There’s no obligation, however if the adviser feels you’d benefit from paid financial advice, they’ll talk you through how that works and the charges involved.
Fidelius are rated 4.7 out of 5 from over 1,500 reviews on VouchedFor, the review site for financial advisors.
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