The Bank of England reduced the base rate from 4.75% to 4.50% in February, holding it at this level in March, and while this isn’t great news for savers, it’s still possible to find plenty of accounts offering inflation-beating returns.
Not all banks and building societies offer competitive savings rates, however, so it’s important to shop around for the best possible returns.
Here’s what you need to know to make sure your savings are working as hard as they possibly can for you.
Why choosing the right account matters
More than one in 10 of us (15%) don’t have a savings account at all, according to money.co.uk, and while many people may feel more comfortable having their money readily available in a current account, these accounts rarely pay the best returns.
It’s especially important when inflation is high, as rising prices eat into the purchasing power of your cash. Inflation eased to 2.8% in the year to February 2025 so something that cost £10 last year will now cost £10.28.
Inflation is currently lower than the Bank of England’s base rate, so it’s possible to find numerous savings accounts that pay interest that matches or beats inflation.
Get more for your money with Raisin UK
Raisin UK provides a free-to-use savings platform that allows savers to browse, open, and manage accounts with over 40 FSCS-protected banks and building societies.
Apply for savings accounts in just a few clicks, and they’ll handle the rest. Sit back, relax, and skip the paperwork as you watch your money grow.
What savings options are there?
There are lots of types of savings accounts, all of which serve different purposes. Some of the most popular types of savings accounts include:
- Easy access savings accounts – These are savings accounts which allow you to make withdrawals instantly or easily without penalty
- Fixed-rate bonds – These accounts offer a fixed rate of interest over a set period of time, and you cannot usually make withdrawals during the fixed term
- Notice accounts – Notice accounts require you to give notice to make withdrawals. If you don’t, you’ll usually have to forgo some interest as a penalty
- Regular savings accounts – These accounts allow you to put away small amount of money on a regular basis, typically ranging from £10-300 a month. The highest-interest paying regular savings accounts are generally linked to current accounts, so you must have a current account first before you’re eligible to open a regular saver account
- Cash ISAs – A tax-efficient way to save money, where you can save up to £20,000 a year and not pay any income tax on the interest you earn.
You can read more about how these accounts work in our guide What are the different types of savings accounts?
How many savings accounts should I have?
The number of savings accounts that you want will really depend on what your savings goals are and your personal situation. There’s no perfect combination of accounts, but many people will have a mixture of different types of savings accounts to suit different needs.
For example, if you have a long term goal of buying a new home, but also want to save for things like holidays, or one-off purchases, then a combination of a fixed-term account, and something with easier access might be a good combination.
The types of account we’ve listed above aren’t exhaustive, and there are lots of other types of savings accounts. If you aren’t sure where to start, an internet search of types of savings accounts that are good for your specific financial goals could be a good place to start.
Bear in mind that if something goes wrong with your savings provider, and they run into financial difficulties, the Financial Services Compensation Scheme (FSCS) will only compensate you with a maximum pay out of £85,000 per financial institution. That means if you have more than £85,000 in savings with one financial institution, then it’s worth moving any fund above this amount you have to a different bank. Find out more in our guide Are my savings safe?
What are the best savings accounts?
Interest rates are changing all the time, but at the time of writing the highest savings rates included:
Fixed-rate bonds
Top 5 Fixed Rate Accounts
by Raisin UK
Interest
Term
Interest on £5,000
Bank
Deposit Guarentee
Details
Variable rate Cash ISAs
Trading 212
Trading 212 Cash ISA
Pays – 5.26%
Minimum investment – £1
The small print – Promo rate for new clients, including a bonus of 0.76% for the first 3 months.
Find out more at – Trading 212
Plum
Plum Cash ISA
Pays – 5.04%
Minimum investment – £1
The small print – To qualify for the Plum Bonus rate you’ll need to ensure you don’t make any more than 3 withdrawals in a single year. If you withdraw more than 3 times in a year, the interest rate on your Cash ISA will drop to 2.50% AER (variable).
Find out more at – Plum
Fixed-rate Cash ISAs
OakNorth
Interest rate (AER) – 4.50%
Minimum opening balance – £1
Small Print – No withdrawals are allowed during the fixed term. Interest is paid on maturity.
Get more for your money with Raisin UK
Raisin UK provides a free-to-use savings platform that allows savers to browse, open, and manage accounts with over 40 FSCS-protected banks and building societies.
Apply for savings accounts in just a few clicks, and they’ll handle the rest. Sit back, relax, and skip the paperwork as you watch your money grow.
Regular savings accounts
Principality
Interest rate (AER) – 7.50%
Minimum opening balance – £1
Small Print – No access within the six-month account term. Interest is paid on maturity.
Monthly income accounts
OakNorth 95 Day Notice Base Rate Tracker
Interest rate (AER) – 4.66%
Minimum opening balance – £1
Small Print – Withdrawals allowed, subject to giving 95 days’ notice. Interest is paid monthly.
(Rates correct at time of writing: 26/02/25)
So don’t delay, check how much interest you’re earning on your savings now, and if your returns are nowhere near close to those shown above, it’s time to vote with your feet and move elsewhere.
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