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?
There are currently more than 1,600 accounts paying inflation-beating returns, according to financial website 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?
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 that 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 savings marketplace Raisin UK, shows the best easy access accounts currently available:
Top 5 Easy Access Accounts
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 Coventry Building Society’s 4 Access Saver account, which pays 4.50% AER on a minimum balance of £1. This account can be opened in branches, over the phone, by post or online. You can take money out of your account up to four times a year without having to pay a charge. From the fifth withdrawal onwards (which can include closure), you’ll receive a charge equal to 50 days’ interest based on the amount you’re withdrawing.
Alternatively, Skipton Building Society’s Single Access Saver Issue 7 account currently pays 4.15% annual interest before tax again on a minimum opening balance of £1. Interest on this account is paid annually. This account can also be opened and operated online if you prefer. However, bear in mind you can only make one withdrawal from this account a year.
Best cash ISAs for over-60s
If you’re looking for tax-free returns, a cash individual savings account (ISA) is well worth considering.
Leeds Building Society’s Online Access Cash ISA (Issue 3) currently pays a competitive rate of 4.41% on a minimum opening balance of £1,000. You can make withdrawals whenever you want, but if your balance falls below £1,000, the interest rate drops to just 0.05% AER.
Similarly, Virgin Money’s Defined Access Cash E-ISA pays 4.06% AER on a minimum opening deposit of £1. You can make up to three penalty-free withdrawals each calendar year, but if you make four or more withdrawals, this will result in a reduction to the interest rate payable.
If you prefer to manage your account in person at a branch or by post, Progressive Building Society’s 1 Year Double Access Cash ISA (Issue 5) pays 4.30% AER on a minimum deposit of £500. Only two withdrawals are permitted each tax year.
Best fixed rate savings accounts for over-60s
The highest-paying fixed rate savings bonds are usually online-only accounts, with Cynergy Bank paying 4.65% for a year on a minimum £1,000 deposit. Another of the top one-year bonds from savings marketplace Raisin and provided by QIBBank pays 4.5% on a minimum balance of £1,000. If you can afford to tie up your savings for a bit longer, QIB Bank’s two-year Fixed Term Deposit account pays 4.4%, again on a minimum deposit of £1,000. These accounts can only be opened online.
If you’d prefer a branch or postal-based account, UBL UK pays 4.46% annual interest on an opening balance of £2,000 held in its One Year Fixed Term Deposit account. You can open and manage this account in branches, by post or online.
Top 5 Fixed Rate Accounts
Fixed rate cash ISAs are also worth a look as returns are free from tax. For example Charter Savings Bank is paying 4.27% on a minimum deposit of £5,000 in its one-year fixed ISA, with interest paid either monthly or at maturity.
United Trust Bank’s one year Fixed Rate cash ISA also pays generous 4.27% 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?
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