Savers may want to get their skates on to benefit from the top-paying savings accounts following February’s base rate cut.
If you’re lucky enough to have some spare cash available, then in recent years you’ll have benefited from some of the highest savings rates seen since 2008. Savers can earn as much as 4.65% interest on some short-term fixed rate bonds, but deals are starting to disappear as rates are expected to continue to fall over the long term.
Both fixed and variable savings rates crept upwards last year, following 14 consecutive hikes in the Bank of England base rate, but are easing after the base rate was cut twice in 2024, in August and November and then again in February 2025. Interest rates currently stand at 4.50%.
Here, we explain what sort of returns you can currently expect to earn on your savings and where to find the top-paying accounts.
How much interest can I earn on my savings?
The highest rates for easy access accounts are currently sitting at around 4.75%, with the top rates on the best five-year fixed-rate bonds sitting at 4.55%.
With interest rates currently higher than inflation, which jumped to 3% in the year to January 2025, savers are still in a relatively strong position – for now at least.
Sarah Coles, head of personal finance, Hargreaves Lansdown: “This rate cut was all-but nailed on. The savings market hadn’t just counted its chickens, it had roasted and sold them – pricing the rate cut firmly into fixed rate deals. It means the fixed term market is unlikely to move far for now.
“Meanwhile, for those banks that gamely held onto easy access rates well above 4.5%, this could be the catalyst for some cuts. It could blow some of the froth off the easy access cash ISA market too, which has been incredibly competitive recently, with plenty of banks offering more on easy access cash ISAs then their equivalent savings accounts. We could see the number of deals over 5% pull back, despite the fact that we’re heading firmly into the traditional ISA season.
“More falls for fixed rates will come, once the market is convinced that more cuts are on the way. At the moment, it looks like this is some way off, especially with tariff dramas fuelling unease over inflation. At times like this, it’s easy to be bamboozled to a full stop, unsure as to whether rates will rise again before they fall. However, if you hang on, in the interim you could be missing out on some rewarding deals – especially over slightly longer periods. Rather than waiting for the best possible moment to fix, it makes sense to take advantage of the best deals while they last.”
What are the top savings accounts?
With living costs still high, it’s more important than ever to ensure you’re earning as much in interest as possible on your cash savings.
Easy-access savings accounts usually enable you to take your money out whenever you want, without any loss of interest. It’s generally considered wise to have three to six months’ worth of essential spending in an easily accessible account to cover any unexpected costs, such as car repairs or a boiler breakdown. You can find the current best deals in our article Best instant access savings accounts revealed.
Alternatively, you may decide to save into a cash ISA for tax-free interest, if you aren’t using this year’s £20,000 annual allowance to invest elsewhere. Read more in our article Best cash ISA rates – which cash ISAs pay the most interest?
Fixed-rate bonds usually pay more than easy access accounts, but you can’t generally withdraw money from this type of savings account before the term ends without penalty. If you need to get your hands on your money urgently, you can close the account, but more often than not this will mean some charges, such as loss of interest. However, you will have the security that the interest rate will remain the same until the end of the account term. Find more information about these accounts and the top rates in our article Fixed rate savings bonds explained.
What should savers do?
See if you can get a better return on your savings elsewhere. Check savings websites such as SavingsChampion or Raisin*, or price comparison sites such as Moneyfactscompare or GoCompare to see if you can find a higher interest rate to move to.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, the online investment platform, said: “Savers enjoyed a saving sweet spot in recent months when easing inflation conveniently collided with still-high interest rates delivering a real return for more accounts. But with savings rates now in retreat mode, those that want to preserve their return must move fast by securing the best deal possible while interest rates remain on the higher side. This is particularly important for anyone with money idling in a current account or an old savings account offering a dismal return.
“Savers would be wise to stay mindful of their Personal Savings Allowance, which has remained the same since 2016, creating a headache for some savers when savings rates ramped up because more people found themselves paying tax on the interest they earn. Easing interest rates won’t resolve that problem entirely. Many savers with the top deals will still secure a decent return on their cash savings, putting them at risk of breaching their PSA.
“While many savers are still making a real return, once inflation is factored in, ultimately, it is the post-tax net return on that cash that is key. Increasing numbers of taxpayers are being dragged into higher rates of tax as their incomes increase, a result of most personal tax thresholds remaining on hold until at least 2028, so, for taxpayers in the higher bands in particular, real returns net of tax may only be marginally positive on the most competitive accounts. This is why a tax-efficient savings strategy is so important, such as taking advantage of your tax-free ISA allowance and topping up pensions.”
If you already have plenty of cash savings set aside that you can access at any time, you may want to consider investing for long term gains. After all, savings rates are not high enough to keep up with rising living costs. Meanwhile, stock markets have fallen substantially this year, which could make it a good time to be invested to benefit for the long term. Find out more in our article Investing – the basics and Savings accounts or shares – which is the best option?
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